S&P Global Ratings retained India's GDP growth forecast at 6 per cent calling it the fastest growing economy among Asia Pacific nations. In its quarterly economic update for Asia-Pacific, S&P Global Ratings forecasted the same growth for Vietnam and the Philippines alongside India on Monday.
In its latest report, S&P has kept the GDP growth forecast for India unchanged for the current and the next fiscal, FY25 partly on account of domestic resilience.
"The medium-term growth outlook remains relatively solid. The Asian emerging market economies remain among the fastest growing ones in our global growth outlook through 2026," PTI quoted Louis Kuijs, Asia-Pacific chief economist at S&P Global Ratings.
While the agency expects RBI to cut interest rates only early next year, it has said that retail inflation is likely to soften to 5 per cent this fiscal from 6.7 per cent citing normal monsoon and softer crude prices as primary reasons.
However, India’s retail inflation eased to a 2-year low of 4.25 per cent in May on an annual basis as against 4.70 per cent in April.
In the recent Monetary Policy Meet (MPC) which concluded on June 8, the Reserve Bank of India (RBI) too, revised down the inflation forecast for FY24. The RBI had cut the inflation aim to 5.1 per cent from 5.2 per cent forecast in April policy.
The decision came amid recent dips in inflation readings, but the print is seen to remain above the 4 per cent target for this fiscal year while there are upside risks to food and commodity prices from potential supply cuts.
"The inflation and rate hike cycles have peaked, in our opinion. But we expect the Reserve Bank of India to cut rates only in early 2024, as it wants to see consumer inflation moving to 4 per cent--the centre of its target range," Kuijs said.
Earlier this month, Chief economic adviser (CEA) V Anantha Nageswaran also said that India’s economy will grow at 6.5% for the rest of the decade, with an occasional 7% growth in a year or so.
He said capital investment in the country will be higher in this financial year which will help India grow at 0.5 to one percentage point higher than that projected by various ratings agencies.
The World Bank had also predicted that India will remain the fastest-growing major economy in terms of both aggregate and per capita GDP despite the slowdown in growth, reason being "resilience in private consumption and investment, and robust growth in the services sector in India."
Projecting India's growth for FY24, FY25 and FY26 at 6.3%, 6.4% and 6.5% respectively, the World Bank had said that India will lift the growth prospects of the South Asian region.
However, for China, S&P has lowered the growth forecast to 5.2 per cent from 5.5 per cent for 2023.
"For the rest of the region, we have left it broadly unchanged, in part because of domestic resilience," S&P said.
Source Name:Economic Times