S&P retains India’s growth projection at 6% for FY24

India will be the fastest growing major economy in Asia Pacific, says S&P Global Ratings

S&P Global Ratings on Monday, June 26, 2023, retained India's GDP growth forecast at 6 per cent saying it will be the fastest growing economy among Asia Pacific nations.

The GDP growth forecast for the current and the next fiscal has been kept unchanged from the forecast made in March partly on account of domestic resilience.

"We see the fastest growth at about 6 per cent in India, Vietnam, and the Philippines, S&P Global Ratings said in its quarterly economic update for Asia-Pacific.

"The medium-term growth outlook remains relatively solid. The Asian emerging market economies remain among the fastest growing ones in our global growth outlook through 2026," said Louis Kuijs, Asia-Pacific chief economist at S&P Global Ratings.

S&P said retail inflation is likely to soften to 5 per cent this fiscal from 6.7 per cent, and the RBI is expected to cut interest rates only early next year.

‘Inflation to remain under 5%’

"In India, under the assumption of normal monsoons, we expect headline consumer inflation to soften to 5 per cent in fiscal 2024 from 6.7 per cent. Softer crude prices and tempering of demand will bring down fuel and core inflation, respectively.

"The inflation and rate hike cycles have peaked, in our opinion. But we expect the Reserve Bank of India to cut rates only in early 2024, as it wants to see consumer inflation moving to 4 per cent--the centre of its target range,” Kuijs said.

S&P has lowered the growth forecast for China to 5.2 per cent from 5.5 per cent for 2023.

“For the rest of the region, we have left it broadly unchanged, in part because of domestic resilience,” S&P said.