S&P Global Ratings has made some changes, to its projections for Indias Gross Domestic Product (GDP) growth in the years presenting a mixed outlook. For the year 2024 (April 2023. March 2024) the rating agency has raised its estimate for GDP growth to 6.4% surpassing the forecast of 6%. This adjustment is attributed to momentum that is offsetting challenges arising from high food prices and weak exports.
On the hand S&P Global has lowered its GDP growth projection for the year 2025 (April 2024. March 2025) from 6.9% to 6.4%. The reasoning behind this revision lies in their expectation of a slowdown in the half of the year. Factors contributing to this include economic growth, a higher starting point and an anticipated delayed impact, from interest rate increases implemented by the Reserve Bank of India.
According to the ratings agency it might take a while for India to reverse its interest rate cycle because of the high headline inflation, which’s still, above the Reserve Bank of Indias target of 4%. S&P Global recognizes that there was an increase in food inflation during the July September quarter. They believe it had minimal impact on the overall inflation trends.
In contrast, to S&P Globals viewpoint Morgan Stanley suggested week that India could potentially be the Asian economy to lower interest rates by June next year.
S&P Global predicts that India will likely experience a decrease of 100 basis points, in interest rates by March 2024. In contrast the agency expects the United States to gradually reduce inflation towards the 2% target set by the US Federal Reserve. Despite projecting a rate hike in December the first rate cut is not expected until, around mid 2024.
According to S&P Globals note, Asia Pacific markets and currencies may continue to face pressure from US interest rates throughout 2024. The possibility of an enduring US economy might necessitate keeping rates elevated for a duration.
Chinas economic growth is expected to align with its potential in 2024 according to S&P Global. The agency highlights an upswing, in growth momentum since August rebounding from a point in July. The implementation of monetary measures in the real estate industry has begun yielding favorable outcomes. However, challenges persist in the property sector. Overall confidence remains subdued leading to a growth outlook for China. S&P Global has adjusted its forecast, for Chinas growth in 2023 to 5.4%.