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S&P ups India’s FY’24 growth forecast to 6.4 pc

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NEW DELHI, Nov 27: S&P Global Ratings on Monday raised
India’s growth forecast for the current financial year to 6.4 per
cent, from 6 per cent, saying that robust domestic momentum
has offset headwinds from high food inflation and weak
exports.
However, it cut the growth estimates for the next fiscal (2024-
25) to 6.4 per cent, from 6.9 per cent, as it expects growth to
slow on a higher base, 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 per cent, from 6 per
cent, as robust domestic momentum seems to have offset
headwinds from high food inflation and weak exports,” S&P
said.
The estimates of S&P is a shade higher than other international
agencies. The IMF, World Bank, ADB, and Fitch expects India’s
GDP to expand 6.3 per cent in the current fiscal.
The RBI has projected GDP growth at 6.5 per cent for current as
well as next financial year.
The Indian economy grew 7.2 per cent in the 2022-23 fiscal
year ended March 2023.

The country’s real GDP rose 7.8 per cent year-on-year in the
June quarter, up from 6.1 per cent in the March quarter.
To reign in inflation, the RBI had hiked benchmark interest rates
by 250 basis points since May last year. The apex bank has held
the repo rate steady at 6.5 per cent since February.
In its Economic Outlook for Asia Pacific, S&P said growth this
year and the next is on track to be the strongest in emerging
market economies with solid domestic demand — India,
Indonesia, Malaysia, and the Philippines.
Fixed investment has recovered considerably more than private
consumer spending in India, it said.
In India, there was a transitory spike in food inflation in the
July-September quarter, but it appears to have had little effect
on underlying inflation dynamics.
Still, headline inflation remains above the Reserve Bank of
India’s target of 4 per cent, suggesting it will be a while before
the rate cycle turns, S&P said.
“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,” S&P said.
Risks remain but so also does the potential for growth in the
region. In coming months, the spotlight may shine a little more

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brightly on emerging markets where domestic demand is
strong, S&P said.
With regard to China, S&P said the outlook for the country has
improved, but obstacles still remain.
S&P raised its 2023 and GDP growth forecast for China to 5.4
per cent and 4.6 per cent.
Still, with the property sector struggling and confidence
subdued, the growth outlook remains moderate, it said.
“China is coping while its neighbors step up. A property
downturn is still a pain point for the Chinese economy, but
growth momentum has slightly improved because of policy
support,” said Louis Kuijs, Asia-Pacific chief economist at S&P
Global Ratings.
Emerging market economies with solid domestic demand are
posting the strongest growth, Kuijs added. (PTI)

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