India is seen as a rising star among Asian peers along with Indonesia and Philippines in 2024 to emerge as one of the fastest growing economies in the region foreign brokerage and Investment Bank Nomura said.
Despite a slowdown in investment and consumption, coupled with global spillovers leading to disappointing GDP growth of 5.7% in 2024, it is going to be one of the fastest growing economies along with the Philippines in the region. The projection reinforces the popular view of a pause in policy rates by the monetary policy committee this week even as inflation worries continue.
“We remain optimistic on the medium-term outlook, but strong near-term growth momentum is unlikely to be sustained into 2024” said Sonal Varma and Aurodeep Nandi, India economist at Nomura.
With core inflation already anchored, it expects headline inflation to ease to 5.1% in 2024 from 5.7% in 2023, despite near-term upside risks from food price inflation.
This growth-inflation mix is likely to lead to the RBI gradually shifting its focus to growth, and cumulatively easing policy rates by 100bps ( one basis point is 0.01 percent), starting from August 2024. The market’s focus for 2024 will be on India’s bond index inclusion and general elections.
“ Our base case is policy continuity, but an upset loss or weaker win could reshuffle the deck on India’s macro outlook” Varma and Nandi said.
“Over the medium term, we see India, Indonesia and the Philippines as Asia’s rising stars” Nomura said in its latest Asia macro outlook.
As compared with other emerging market regions, Asia has stronger economic fundamentals: higher growth, lower inflation and
healthier external finances, Nomura said. Even with a structurally slowing China, our