S&P Ratings has changed India’s GDP growth estimate for the current financial year. With this, the rating agency has reduced the growth (GDP Growth) estimate for FY25. The global rating agency said in its research note on Economic Outlook for Asia-Pacific that we have increased India’s GDP growth estimate for FY24 from 6% to 6.4%. Because due to strong domestic momentum, the impact of disruptions due to high food inflation and weak exports seems to be reducing.
Growth will remain slow in the last 6 months: S&P Ratings
S&P Ratings cautioned that we still expect the pace of growth to slow down in the last six months of the financial year. This will be due to weak global growth, high base and impact of increase in rates. The rating agency said that it is reducing the growth estimate in FY25 from 6.9% to 6.4%.
Meanwhile, the bad condition of China’s property market is having an impact on the world economy. In the report, China’s GDP growth forecast has been kept at 5.4% during 2023 and 4.6% in 2024.
According to S&P Ratings, apart from China, other Asia-Pacific economies remain strong. The rating agency said that the strongest growth this year and in 2024 will be seen in emerging market economies. Apart from India, there is strong domestic demand in Indonesia, Malaysia and Philippines.
No hope of tightening monetary policy
The rating agency said that the pace of recovery after the pandemic is different in different regions. In the first six months of 2023, GDP has exceeded 2019 levels, except in Hong Kong and Thailand. North-East Asia, India, Australia and New Zealand have seen recovery in fixed investment driven more by private consumer spending.
S&P Ratings said in the outlook that inflation continues to decline. In such a situation, there is no hope of central banks tightening the monetary policy again. Still, there is pressure due to US interest rates remaining high. Therefore, there is no possibility of any major fall in policy rates in the next six months.
