Select Page

New Delhi: Global ratings agency S&P estimates India’s GDP growth to moderate to 6.8% in 2024-25 after a better than expected 7.6% growth in 2023-24.

This is a 40 basis points upgrade from its earlier forecast but is below 7% growth projected by RBI and govt. Several agencies have raised their growth forecast for India after a better-than-expected quarterly GDP growth of 8.4% in the December quarter.

“Even as we expect a mild slowdown in Asian EM economies, we generally see solid domestic demand growth and a pick-up in exports to drive robust growth, with India, Indonesia, the Philippines and Vietnam in lead,” said the report titled Economic Outlook Asia-Pacific Q2 2024: APAC Bides Its Time On Monetary Policy Easing.

Restrictive interest rates are likely to weigh on demand in next financial year, while regulatory actions to tame unsecured lending will affect credit growth. A lower fiscal deficit will also dampen growth. It expects RBI to cut rates by June this year.

“We forecast rate cuts of up to 75 bps (India, Indonesia, New Zealand, and the Philippines) this year (which for India is the fiscal year), with the median reduction of 50 bps. In line with our projection for US policy rates, we largely expect these moves to occur in the second half of the year,” the report said.

“In India, slowing inflation, a smaller fiscal deficit and lower US policy rates will lay the ground for RBI to start cutting rates. But we believe more clarity on the path of disinflation could push this decision at least to June 2024, if not later,” the report added.

The agency expects consumer inflation to decline further to 4.5% on average in fiscal 2025 and does not see the global shipping issues impacting overall inflation.

We also published the following articles recently

RBI clampdown will raise capital, slow growth for lenders: S&PS&P Global Ratings highlights RBI’s regulatory actions targeting governance, transparency, and compliance in the financial sector. The clampdown may elevate capital costs, slow credit growth, and impact sector valuations, leading to longer lending processes and increased risk premiums for equity investors.

New study: Slower growth in working-age foreign-born population slows US economic growthNFAP study highlights the significant impact of slowed U.S. foreign-born population growth on GDP, indicating a potential 3.2% loss from 2016-2022, with estimated $335 billion GDP loss and implications for entrepreneurship and economic dynamism.

Bank of India cuts home loan ratesBank of India cuts home loan rates to 8.3% from 8.45% in a festive offer, Union Bank of India and Bank of Maharashtra offer 8.35%, while SBI starts at 8.4%.

  • Published On Mar 27, 2024 at 08:31 AM IST

Join the community of 2M+ industry professionals

Subscribe to our newsletter to get latest insights & analysis.

Download ETBFSI App

  • Get Realtime updates
  • Save your favourite articles

icon g play

icon app store

Scan to download App
bfsi barcode

Share it on social networks