fitch-lowers-india-s-gdp-growth-forecast-to-6-4pc-for-fy25

Fitch Ratings has revised India's GDP forecast for 2024-25 to 6.4 percent from its previous estimate of 7.0 percent. The downward revision from the rating agency came soon after the Reserve Bank, in its latest monetary policy, cut its growth forecast to 6.6 percent from 7.2 percent.

 

Fitch forecasts India's GDP to expand by 6.4 percent in the 2024-25 financial year and 6.5 percent in 2025-26, slowing from the 8.2 percent pace in 2023-24. However, Fitch, in a statement on Friday, asserted that India's economic growth remains strong relative to that of global peers.

 

"The Indian economy recovered strongly from the Covid-19 pandemic shock. Although indicators point to a more mixed picture in recent months, we do not think that the softness will translate into a prolonged slump in economic activity."

 

Fitch expects domestic demand to continue driving economic growth amid a potential trade war between the US and China and a global trade slowdown.

 

Fitch expects policy continuity in areas that have been key growth drivers, such as the infrastructure drive, digitalisation, and ease of doing business measures, even as the government follows through on fiscal consolidation. Public infrastructure capex will remain supportive of the economy and the assets that are directly deployed or related to the sector.

 

The improved health of bank and corporate balance sheets in recent years should also pave the way for a positive investment cycle and faster capital spending, Fitch said.

 

The Indian economy grew by 5.4 percent in real terms in the July-September quarter of the current financial year 2024-25. The quarterly growth was quite lower than the RBI's forecast of 7 percent. The Indian economy grew by 6.7 percent in the April-June quarter, similarly lower than the RBI's forecast.

 

The Economic Survey tabled in Parliament earlier this year "conservatively" projected India's real GDP growth at 6.5-7 percent for 2024-25, acknowledging that market expectations are higher. Real GDP growth is the reported economic growth adjusted for inflation.

 

India's GDP grew by an impressive 8.2 percent during the financial year 2023-24, continuing to be the fastest-growing major economy. The economy grew by 7.2 percent in 2022-23 and 8.7 percent in 2021-22.