Fitch Upgrades India's GDP Forecast for FY24 and FY25 Amidst Strong Economic Expansion: In a recent development, Fitch Ratings has revised India's Gross Domestic Product (GDP) growth forecast for the current and upcoming financial years upwards. This adjustment comes as the ratings agency anticipates India's economy to maintain its robust expansion trajectory. Conversely, Fitch has slightly lowered its forecast for China due to the ongoing property crisis in the nation.
According to Fitch's March Outlook report, India's real GDP for FY25 is now projected to grow by 7 per cent, marking a 0.5 percentage point upward revision. The report stated, "Prospects for EM ex China have also brightened, particularly in India, where we now expect growth to reach 7.8% in FY24 and 7.0% in FY25, both sizeable upward revisions."
The Indian government had recently raised its forecast for FY24 GDP growth to 7.6 per cent, up from the previous estimate of 7.3 per cent.
Fitch attributes this optimistic outlook for India to the expected strength in domestic demand, particularly in investment, alongside sustained levels of business and consumer confidence. The report suggests that growth in the short term is likely to outpace the economy’s estimated potential, moderating towards trend in FY25, with real GDP rising by 6.5 per cent.
Meanwhile, retail inflation in India remained stable at 5.1 per cent in February, with core inflation measures continuing their downward trend. Fitch emphasized the importance of food prices in driving inflation developments and their impact on approaching the Reserve Bank of India’s 4 per cent mid-point target within its 2-6 per cent target band.
On the global front, Fitch adjusted China’s 2024 forecast to 4.5 per cent from 4.6 per cent, citing concerns over the property sector and increasing deflationary pressures. Despite this, the rating firm raised its 2024 global GDP growth forecast to 2.4 per cent, indicating an improvement in near-term world growth prospects.
Furthermore, Fitch upgraded the forecast for the US to 2.1 per cent from 1.2 per cent, as per its December 2023 outlook, reflecting a more optimistic outlook for the country's economic performance.
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