S&P Maintains India's Economic Growth Estimate For FY24 At 6%

India's economic development will be 6 per cent in the fiscal year beginning April, rising to 6.9 per cent the following year, according to S&P Global Ratings.

In a quarterly update for the Asia-Pacific area, the agency predicted that inflation would fall to 5 per cent in 2023-24, down from 6.8 per cent in the current fiscal year.

According to the agency's projections, the country's GDP will expand by 7 per cent in the current fiscal year (ending 31 March), before slowing to 6 per cent in 2023-24.

“India leads, with an average growth of 7 per cent in 2024-2026,” according to the update.

According to S&P, the subcontinent's GDP will increase to 6.9 per cent in 2024-25 and 2025-26 and then to 7.1 per cent in 2026-27.

“Traditionally, domestic demand has led the Indian economy. However, it has recently become more sensitive to the global cycle, partly due to increasing commodity exports. Its year-on-year GDP growth slowed to 4.4 per cent in the fourth quarter (October-December 2022),” according to the rating agency.

Following a recent increase in inflation, S&P expected the Reserve Bank of India to boost its already high policy rate even further.

“In our view, India's Consumer Price Index (CPI) inflation should moderate to 5 per cent in the fiscal year 2024 (ending March 2024), but we also anticipate upside risks, including from weather-related factors,” according to the report.

S&P Global Ratings kept its “cautiously optimistic outlook for Asia-Pacific,” predicting that China's economy will recover this year.

“We believe China's recovery will be largely organic, driven by consumption and services. Our GDP growth forecast for this year of 5.5 per cent, up from 4.8 per cent in November, exceeds the 5 per cent target announced at the National People's Congress meetings in March,” said S&P Global Ratings chief economist Louis Kuijs.