S&P Global Retains India's GDP Growth Forecast At 6.8 Per Cent For FY25

S&P's projections are more conservative than those of the RBI, which earlier this month predicted a 7.2 per cent growth rate for the Indian economy in the current fiscal year

S&P cited India's high interest rates and reduced fiscal stimulus as factors that will temper demand in non-agricultural sectors. ( Image Source :PTI )

In its latest economic outlook for the Asia Pacific region, S&P Global Ratings has maintained India's GDP growth forecast for the current financial year at 6.8 per cent. The agency cited high interest rates and reduced fiscal stimulus as factors that will temper demand in non-agricultural sectors.

India's economy exhibited impressive growth of 8.2 per cent in the fiscal year 2023-24. However, S&P anticipates that this momentum will moderate to 6.8 per cent in the current fiscal year. Looking further ahead, S&P projects growth rates of 6.9 per cent for the fiscal year 2025-26 and 7 per cent for 2026-27.

These projections are more conservative than those of the Reserve Bank of India (RBI), which earlier this month predicted a 7.2 per cent growth rate for the Indian economy in the current fiscal year, driven by improving rural demand and moderating inflation.

Other agencies have varied projections for India's GDP growth in FY25. Fitch Ratings and the Asian Development Bank (ADB) both forecast a 7.2 per cent and 7 per cent growth rate, respectively. In contrast, Moody's Ratings and Deloitte India estimate a 6.6 per cent growth, while Morgan Stanley aligns with S&P, projecting a 6.8 per cent growth rate.

In contrast, S&P has revised its 2024 GDP growth forecast for China upwards to 4.8 per cent from the previous 4.6 per cent. Despite this increase, the agency predicts a sequential slowdown in the second quarter due to subdued consumption and strong manufacturing investment, which are expected to impact prices and profit margins.

Meanwhile, India is poised to remain the fastest-growing major economy, with a steady growth rate of 6.7 percent projected over the next three years, including the current fiscal year, according to a report by World Bank. The latest Global Economic Prospects report from the World Bank highlights that India's growth rate is estimated to have reached 8.2 percent in the fiscal year 2023/24 (April 2023 to March 2024). This figure is 1.9 percentage points higher than the January estimates.