News

Published: November 28, 2023
Updated: November 28, 2023

S&P Global Upgrades India's Economic Outlook for FY24 Amidst Robust Momentum

Positive Shift in Growth Projection

S&P Global Ratings has revised India's Gross Domestic Product (GDP) growth forecast for the current fiscal year (FY24) upwards, citing a resilient domestic market that appears to counter challenges from elevated food inflation and sluggish exports.

Growth Projections: FY24 and FY25

The US-based ratings agency, in its report on the Asia-Pacific region's growth outlook, raised India's growth projection for FY24 by 0.4 percentage points to an optimistic 6.4 percent. However, the report also notes a conservative outlook for FY25, with growth estimates trimmed to 6.4 percent, anticipating a slowdown in the latter half due to global economic conditions and the impact of rate hikes.

Factors Driving Growth

S&P highlighted that India's GDP surpassed the 2019 levels by an impressive 15.5 percent in the first half of the current fiscal year. The recovery in fixed investments outpaced private consumer spending, reflecting a positive trend in economic revival.

Inflationary Concerns and Risk Assessment

While acknowledging a transient spike in food inflation in Q2, the report emphasizes its limited effect on underlying inflation dynamics. However, it flags lingering concerns as headline inflation remains above the Reserve Bank of India's (RBI) target of 4 percent, indicating a prolonged period before a shift in the rate cycle.

Comparative Regional Outlook

S&P Global's assessment extends to the broader Asia-Pacific region, expressing confidence in overall growth. For China, it forecasts a growth rate of 5.4 percent in 2023 and anticipates China to align with its growth potential in 2024.

Consistent Positive Predictions for India

This optimistic outlook aligns with recent predictions from other financial entities. Morgan Stanley had forecasted a growth rate of approximately 6.5 percent for India in both FY24 and FY25, emphasizing strong fundamentals and robust domestic demand. Moody's Investor Services and the International Monetary Fund (IMF) have also echoed positive sentiments, citing India's resilience and predicting growth rates of 6.7 percent and 6.3 percent, respectively.

Steadfast Economic Resilience

As various global institutions like Moody's and World Bank align in predicting a positive trajectory for India's economic growth, S&P Global's upgraded outlook reinforces the nation's steadfast resilience. The buoyancy in economic indicators signals continued stability, providing a promising backdrop for India's economic journey in the foreseeable future.