S&P has upped its GDP forecast for India

Weighed by the full effect of monetary tightening, global weaknesses amid intense geopolitical turmoil and a high base, S&P now forecasts India’s growth in 2024-25 at 6.4%.
Weighed by the full effect of monetary tightening, global weaknesses amid intense geopolitical turmoil and a high base, S&P now forecasts India’s growth in 2024-25 at 6.4%.

Summary

  • Our economy is projected to fare well despite global turbulence and monetary tightening.

The latest forecast for India’s economic growth by Standard & Poor’s is out. The global rating agency now sees India’s gross domestic product expanding 6.4% in 2023-24, up from the 6% it had pencilled in earlier. That’s a respectable bump-up and S&P attributes it to the robust momentum in the domestic economy, which seems to have offset headwinds on the export front and lived down high food inflation. 

To be sure, this merely brings its forecast closer to the Reserve Bank of India’s 6.5% estimate. So, it might not be very eye-catching, after all. Yet, its raised expectation does help reinforce the reading that India’s economy is faring well. Next year, however, could be tougher. Weighed by the full effect of monetary tightening, global weaknesses amid intense geopolitical turmoil and a high base, S&P now forecasts India’s growth in 2024-25 at 6.4%, a good half-a-percentage-point lower than its previous estimate of 6.9%. 

The consolation, however, is that this is expected to be temporary, with a rebound to 6.9% projected in 2025-26. Overall, the numbers look reassuring. Barring a Black Swan shock, India’s economy seems set to do well in the face of global turbulence.

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