S&P revises upwards India’s GDP growth forecast to 6.4%

Tribune News Service

Sandeep Dikshit

New Delhi, November 27

S&P Global Ratings on Monday raised India’s GDP growth forecast for the current financial year to 6.4% due to “robust domestic momentum” that has offset headwinds from high food inflation and weak exports. It had earlier forecast growth of 6%, which was subsequently raised to the band of 6.2-6.4%.

Slashes estimates for next fiscal

• The global ratings agency, however, cut the growth estimates for the next fiscal (2024-25) to 6.4%, from 6.9%, as it expects growth to slow on a higher base, subdued global growth and lagged impact of interest rate hike
• The estimates of S&P is a shade higher than the IMF, World Bank, ADB, and Fitch, which expect India’s GDP to expand by 6.3% in the current fiscal
• The RBI has projected GDP growth at 6.5% for the current as well as the next financial year

However, S&P Global Ratings’ latest Economic Outlook for Asia Pacific saw weaker growth in the next fiscal 2024-25. It has accordingly lowered its expectations from 6.9% to 6.4% due to higher base effects, subdued global growth and lagged impact of interest rate hike.

“We have revised up our projection for India’s GDP growth for fiscal 2024 (ending in March 2024) to 6.4%, from 6%, as robust domestic momentum seems to have offset headwinds from high food inflation and weak exports,” it said.

In contrast, the ratings agency pointed at China’s struggling property sector and subdued confidence due to which the growth outlook remains moderate. “China is coping while its neighbours step up. A property downturn is still a pain point for the Chinese economy, but growth momentum has slightly improved because of policy support,” it noted.

S&P released its revised expectations a week after Goldman Sachs did the same. It, however, pegged the current fiscal’s growth at 6.2% in the current 2023-24 fiscal but higher at 6.5% than the S&P’s projection of 6.4% for the next 24-25 fiscal. The RBI has projected GDP growth at 6.5% for the current as well as next financial year. The economy grew 7.2% in the previous 2022-23 fiscal year.

Like Goldman Sachs, it also highlighted inflation as a worrying factor. “In Australia, India, and the Philippines, lingering inflation risks are keeping central banks occupied. The government plans to expand fiscal policies in several countries could complicate central banks’ policymaking,” said the ratings agency.

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