S&P Global Market Intelligence boosted India's growth forecast for FY24 to 6.6%

According to a report by The Economic Times, S&P Global Market Intelligence boosted India's growth forecast for FY24 to 6.6% on the basis of the country's robust development in the April-June quarter. Read more : India’s trade deficit jumped to $24.16 billion, a 17 % increase over the $20.67 billion reported in July Compared to the analytics company's August forecast of 5.9% increase, this is a considerable shift. To reach the upper band objective range set by the RBI, the inflation rate was predicted to rise substantially to 6% in 2023 from its August reading of 5.1%.

Strong rise in domestic demand

According to Rajiv Biswas, the APAC Chief Economist at S&P Global Market Intelligence, India's economic growth momentum was strong in the April–June quarter, rising at a pace of 7.8% year–over–year, backed by strong increase in domestic demand, according to a comment from The Economic Times. S&P is more optimistic than the Reserve Bank of India, which anticipates that the economy would expand by 6.5% this fiscal year, despite being less negative about inflation. The recent rise in global oil prices, according to Biswas, poses a risk to the outlook. He pointed out that there is still a chance that a significant El Nino weather event would develop in late 2023 or early 2024, which might result in drought conditions and drive up the cost of key agricultural commodities. S&P noted that instead of the 6.1 percent predicted in August, India's GDP is anticipated to grow at a rate of 6.2 percent in FY25 due to worries about the state of the global economy. Because it was optimistic about the future of the world, the corporation upped its growth projection for 2023 to 2.6%, but it cut its growth forecast for 2024 to 2.3% in its September update.

Inflation and rising geopolitical tensions 

The study asserted that the 2024 global growth prediction has once again been reduced and listed potential downside risks such as inflation persistence, tighter financial conditions, and rising geopolitical tensions. The company stated that the recession in Europe was the most likely scenario for the second half of 2023, whereas the US is anticipated to see a noticeable slowdown and dangers to China's economy. It is projected that sluggish global growth will hurt India's exports. Inflation in India is expected to be high in 2024, coming in at 5.3%. In reaction to its prediction of increasing inflation patterns worldwide, the global analytics organisation increased its global inflation forecast for 2023 and 2024.

Concern is raised by rising crude oil prices

According to S&P, "the near-term outlook for inflation has deteriorated," as stated in The Economic Times, due to rising crude oil costs and the price of several industrial non-energy commodities. The research also mentioned the generally tight labour market conditions, rising wage and unit labour costs, and continuing core inflation rates, notably for services. The group predicts that global inflation will peak at 5.7% in 2023 and remain over 4% in 2024. As a result of lower tomato prices and a Rs 200 ($2.4) decrease in the price of LPG cylinders, India's inflation rate, which was 7.4% in August, dropped to 6.8%. A further drop is anticipated.Experts predict that high inflation will quicken the pace of rate decreases. The Monetary Policy Committee of the RBI is expected to keep the policy rate at 6.5 percent at its meeting in early October.   OTT India updates you with the latest news, The Country’s no.1 digital news platform OTT India. Keeps you updated with national, and international news from all around the world. For more such updates, download the OTT India app on your Android and IOS device.