NEW DELHI: Fitch Ratings on Tuesday raised India's growth forecast for the current financial year to 7.2 per cent from 7 per cent estimated in March, and said rising consumer confidence will boost spending besides an increase in investment.
In the June update of its Global Economic Outlook report, Fitch said it expects inflation to decline to 4.5 percent by the end of this year and the RBI to cut policy interest rates by 25 basis points to 6.25 percent.
“We expect the Indian economy to grow at a strong 7.2 per cent in FY 2024/25 (revised 0.2 pp above March GEO),” Fitch said in its Global Economic Outlook report.
It said investment would continue to rise, but at a slower pace than recent quarters, while rising consumer confidence would drive a recovery in consumer spending.
For fiscal years 2025-26 and 2026-27, Fitch projected growth rates of 6.5 percent and 6.2 percent, respectively.Fitch's estimates for FY25 are in line with those of the RBI, which earlier this month had projected the Indian economy to grow at 7.2 per cent in the current financial year on the back of improving rural demand and softening inflation.
While the Asian Development Bank (ADB) has projected growth of 7 percent, S&P Global Ratings and Morgan Stanley have projected a growth rate of 6.8 percent.
Moody's Ratings and Deloitte India estimate that India's GDP will grow at 6.6 percent in the financial year 2024-25.
The Indian economy grew by 8.2 percent in the last financial year (2023-24), up from 7.8 percent in the March quarter.
Fitch said purchasing managers' survey data points to continued growth at the start of the current fiscal year.It said signs of a more normal coming monsoon season should support growth and make inflation less volatile, although the recent heat poses risks.
“We expect growth to slow in subsequent years and approach our medium-term trend forecast,” it said, adding that growth will be driven by consumer spending and investment.
Consumer price inflation has declined since the beginning of the calendar year, with annual inflation slowing from 4.7 percent in May to 5.7 percent in December 2023.
According to official forecasts, rainfall during June-September is likely to be above average, Fitch said, which should limit inflation risks from rising food prices.
"We expect headline inflation to continue to decline to 4.5 percent by the end of the calendar year and average 4.3 percent in 2025 and 2026, which is slightly above the midpoint of its target range (4 percent+/-2 percent)," Fitch said. Will remain." Said.
According to government data, retail inflation fell to a one-year low of 4.75 percent in May.
In the June update of its Global Economic Outlook report, Fitch said it expects inflation to decline to 4.5 percent by the end of this year and the RBI to cut policy interest rates by 25 basis points to 6.25 percent.
“We expect the Indian economy to grow at a strong 7.2 per cent in FY 2024/25 (revised 0.2 pp above March GEO),” Fitch said in its Global Economic Outlook report.
It said investment would continue to rise, but at a slower pace than recent quarters, while rising consumer confidence would drive a recovery in consumer spending.
For fiscal years 2025-26 and 2026-27, Fitch projected growth rates of 6.5 percent and 6.2 percent, respectively.Fitch's estimates for FY25 are in line with those of the RBI, which earlier this month had projected the Indian economy to grow at 7.2 per cent in the current financial year on the back of improving rural demand and softening inflation.
While the Asian Development Bank (ADB) has projected growth of 7 percent, S&P Global Ratings and Morgan Stanley have projected a growth rate of 6.8 percent.
Moody's Ratings and Deloitte India estimate that India's GDP will grow at 6.6 percent in the financial year 2024-25.
The Indian economy grew by 8.2 percent in the last financial year (2023-24), up from 7.8 percent in the March quarter.
Fitch said purchasing managers' survey data points to continued growth at the start of the current fiscal year.It said signs of a more normal coming monsoon season should support growth and make inflation less volatile, although the recent heat poses risks.
“We expect growth to slow in subsequent years and approach our medium-term trend forecast,” it said, adding that growth will be driven by consumer spending and investment.
Consumer price inflation has declined since the beginning of the calendar year, with annual inflation slowing from 4.7 percent in May to 5.7 percent in December 2023.
According to official forecasts, rainfall during June-September is likely to be above average, Fitch said, which should limit inflation risks from rising food prices.
"We expect headline inflation to continue to decline to 4.5 percent by the end of the calendar year and average 4.3 percent in 2025 and 2026, which is slightly above the midpoint of its target range (4 percent+/-2 percent)," Fitch said. Will remain." Said.
According to government data, retail inflation fell to a one-year low of 4.75 percent in May.
