Economic Outlook
S&P says India medium-term growth outlook solid, sees GDP rising 7% in FY27
This story was originally published at 18:33 IST on 13 November 2024
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--S&P: India's medium-term growth outlook solid
--S&P: See India's GDP growth at 7.0% in FY27
--S&P: India to face hurdles in job creation, slow farm growth
--S&P: Tough global environ for mfg competitiveness another hurdle for India
--S&P: Improving infra, strong domestic services to support India's growth
--S&P: Urbanisation, digitalisation to also support India's growth
NEW DELHI – S&P Global Ratings sees India's medium-term growth outlook being "solid", with GDP growth expected to rise gradually from a projected 6.8% in the current financial year ending March to 7.0% in 2026-27.
India's GDP grew 8.2% in FY24 and 6.7% in Apr-Jun--the lowest in five quarters. The Reserve Bank of India has projected India's GDP growth for FY25 at 7.2%, above the Indian government's forecast of 6.5-7.0%, before cooling slightly to 7.1% in FY26. S&P sees India's GDP growth next year at 6.9%.
"The economy will face hurdles such (as) generating employment for new labour market entrants, slow growth in agriculture, and a tough global environment for manufacturing competitiveness," the global ratings agency said on Wednesday in a webinar on the Asia-Pacific credit outlook for 2025.
"However, there are resilient drivers supporting the economy's medium run performance. Improving infrastructure, strong domestic services, urbanisation, and digitalisation will support growth," it added.
On prices, S&P sees inflation being fairly stable going forward and has forecast it to average 4.5% in FY25--same as the RBI--and 4.6% in each of the next two years. This comes a day after India's headline retail inflation rate surged to a 14-month high of 6.21% in October, forcing economists to raise their inflation forecasts close to 5% and postpone interest rate cut calls to February and even April in some cases.
S&P itself sees the policy repo rate ending FY25 at 6.00%, indicating a 50-basis-point reduction over the next two meetings of the Monetary Policy Committee. A further 50 bps of rate cuts are then predicted by the ratings firm for FY26 and a 25 bps cut in FY27 to take the repo rate to 5.25%. End
Reported by Siddharth Upasani
Edited by Saji George Titus
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