Morgan Stanley forecasts strong Indian GDP growth amid robust domestic demand
Morgan Stanley, a global investment banking firm, has expressed optimism about India's economic growth prospects, citing robust domestic demand. The firm remains positive about the growth outlook, expecting India's GDP to grow at 6.8% in the current financial year 2024-25 and 6.5% in 2025-26.
Inflation and Current Account Deficit Morgan Stanley predicts that inflation will remain around 5% in the second quarter, before easing to 4.1% in the second half of 2024. For the next financial year, it anticipates retail inflation to average 4.5%. The firm expects the current account deficit to stay within 1-1.5% of GDP in 2025-26, supported by strong service exports.
Monetary Policy Morgan Stanley foresees the Reserve Bank of India (RBI) maintaining the policy rates at 6.5% in the near future. The decision is influenced by a more conservative rate cut cycle by the US Federal Reserve and positive domestic factors such as improving productivity and rising investment rates.
«This is on the back of a shallower and deferred rate cut cycle for the Fed on the global front and improving productivity growth, a rising investment rate and inflation tracking above the target of 4 per cent on the domestic front,» it explained.
Inflation continues to remain the main concern for the Reserve Bank of India's monetary policy committee members before it goes ahead and loosens its stance on key interest rates. As per the minutes of the latest monetary policy meeting released on Friday, there have been several mentions of uncertainties around
