S&P Global Ratings raises India's FY24 GDP growth forecast; cuts FY25 projection
Read here: Exit polls, GDP data, F&O expiry, auto sales to guide market direction this week The agency also noted that GDP exceeded the 2019 level by 15.5 percent in India in the first half of the current fiscal. Also, fixed investment has recovered considerably more than private consumer spending, it added. S&P also believes that it will take some time for India's interest rate cycle to turn as the headline inflation still remains above the RBI's target of 4 percent.
"In India, there was a transitory spike in food inflation in the July-September quarter, but it appears to have had little effect on the underlying inflation dynamics," the note said. It expects interest rates to fall by 100 basis points by March 2024. The Consumer Price Index (CPI) inflation declined to 4.9 percent in October after touching a high of 7.4 percent in July.
In its October statement, the Monetary Policy Committee had said that the near-term inflation outlook is expected to improve on the back of vegetable price correction and the recent reduction in LPG prices. For the US, S&P Global sees a gradual decline in inflation towards the US Federal Reserve's target of 2 percent. However, it expects another rate hike in the December meeting and the first cut to take place only in mid-2024.
"In all, the strain from higher US interest rates on Asia-Pacific markets and currencies will likely persist into 2024," the note said. Meanwhile, S&P Global expects overall growth in the Asia-Pacific region to be on track. “Overall, growth this year and next is on track to be the strongest in emerging market economies with solid domestic demand: India, Indonesia, Malaysia, and the Philippines," it said For China, S&P Global has raised its 2023 forecast to 5.4
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