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NEW DELHI: Fitch Ratings on Thursday raised India’s GDP growth forecast for the current financial year, citing broad-based strength and robust quarterly GDP growth. Fitch had earlier forecast the economy to grow by 6% in 2023-24, lowering it from 6.2%. Now, it has forecast 6.5% growth for 2024-25 and 2025-26 fiscal years.
“India’s economy has been showing broad-based strength – with GDP up by 6.1% (year-on-year) in 1Q23 and auto sales, PMI surveys and credit growth remaining robust in recent months – and we have raised our forecast for the fiscal year ending in March 2024 (FY23-24) by 0.3percentage points to 6.3%,” Fitch Rating said in its Global Economic Outlook.
The global ratings agency said they have revised up emerging markets ex-China growth for 2023 to 2.9% from 2%, with Brazil, India, Mexico and Russia seeing substantive improvements. “The stronger outturn in 1Q23 and near-term momentum have prompted us to upgrade our FY23-24 growth forecast to 6.3% – revised up from 6% in March – one of highest growth rates in the world,” Fitch said.
The RBI estimates growth to be 6.5% in the current fiscal year, while the government forecasts growth in the 6.5%-7% range. China’s growth has been raised in 2023 forecast to 5.6% from 5.2% after a swifter-than-expected reopening rebound in 1Q23. The recovery has faltered somewhat in recent months but consumption continues to normalise and macro policy is starting to be eased.
Fitch said India’s economy will be affected to an extent by slowing global trade. “Domestically, full impact of 250 basis points of monetary tightening is still to be felt. Consumers have also experienced a drop in purchasing power as inflation increased sharply in 2022 and household balance sheets have also been weakened through the pandemic.”
“India’s economy has been showing broad-based strength – with GDP up by 6.1% (year-on-year) in 1Q23 and auto sales, PMI surveys and credit growth remaining robust in recent months – and we have raised our forecast for the fiscal year ending in March 2024 (FY23-24) by 0.3percentage points to 6.3%,” Fitch Rating said in its Global Economic Outlook.
The global ratings agency said they have revised up emerging markets ex-China growth for 2023 to 2.9% from 2%, with Brazil, India, Mexico and Russia seeing substantive improvements. “The stronger outturn in 1Q23 and near-term momentum have prompted us to upgrade our FY23-24 growth forecast to 6.3% – revised up from 6% in March – one of highest growth rates in the world,” Fitch said.
The RBI estimates growth to be 6.5% in the current fiscal year, while the government forecasts growth in the 6.5%-7% range. China’s growth has been raised in 2023 forecast to 5.6% from 5.2% after a swifter-than-expected reopening rebound in 1Q23. The recovery has faltered somewhat in recent months but consumption continues to normalise and macro policy is starting to be eased.
Fitch said India’s economy will be affected to an extent by slowing global trade. “Domestically, full impact of 250 basis points of monetary tightening is still to be felt. Consumers have also experienced a drop in purchasing power as inflation increased sharply in 2022 and household balance sheets have also been weakened through the pandemic.”
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