GDP growth will moderate to 6.5% in FY25 on global headwinds: Axis Bank

economictimes.indiatimes.com:

GDP growth will moderate to 6.5 per cent in FY25, mainly due to global headwinds, Axis Bank's chief economist Neelkanth Mishra said on Monday. India's GDP is 7 per cent lower than what it would have been if the pre-pandemic GDP growth trend had continued, Mishra added.
It can be noted that last Friday, the Reserve Bank sharply upped its FY24 growth estimate to 7 per cent from the earlier 6.5 per cent.

Mishra also pegged the FY24 growth at 7 per cent with upside risks.
For FY25, he expects a moderation in the real GDP growth to 6.5 per cent, Mishra said, attributing the same to an intensification of global headwinds in the near future.
He said the domestic activity is resilient, and the global growth is already proving to be a drag, and added that the same is likely to worsen going ahead.

Mishra explained that in the US, the largest economy in the world, the growth is being boosted by fiscal deficit and predicted the long-feared recession to be a reality.
«Recession in the US is delayed, not deferred,» he said, terming the situation around the fiscal deficit in the US as his biggest concern.
The chief economist said he is alarmed by the lack of discussion on this critical aspect, stating that the US fiscal challenges are underappreciated.

The US has adopted a pro-cyclical policy stance rather than being the more prudent counter-cyclical one adopted by countries like India, Mishra said.
The world has to get used to the «policy inversion» in the US, and the scarcity in dollars, Mishra said, adding that the latter will impact even a country like India.
He said while India could easily fund USD 70 billion of a current account deficit, funding even USD 30-40 billion will now get hard.