S&P Global Ratings revised down its estimate for India’s economic growth in the next two financial years as high interest rate and lower fiscal impulse temper urban demand.
The rating agency projected a 6.7 per cent GDP growth rate in 2025-26 financial year and 6.8 per cent in the following fiscal year. These are down from 6.9 per cent and 7 per cent, respectively in previous projections.
Notably, for FY25, S&P Global pegged GDP growth rate at 6.8 per cent. Further for FY28, the agency expects India’s GDP to grow at 7 per cent.
S&P retained its growth projection for China at 4.8 per cent in 2024 but cut next year’s forecast to 4.1 per cent from 4.3 per cent earlier and to 3.8 per cent in 2026 from the previous estimate of 4.5 per cent.
In an update to its economic forecast for Asia-Pacific economies after US election results, S&P said, “In India we see GDP growth easing to 6.8 per cent this fiscal year as high interest rates and a lower fiscal impulse temper urban demand. While purchasing manager indices (PMIs) remain convincingly in the expansion zone, other high-frequency indicators indicate some transitory softening of growth momentum due to the hit to the construction sector in the September quarter.”
Recently, rating agency Moody’s has also forecasted 7.2 per cent GDP growth in the 2024 calendar year and 6.6 per cent in the next. It said the Indian economy is in a sweet spot, with a mix of solid growth and moderating inflation.
In the second quarter of 2024, India’s real GDP expanded 6.7 per cent year-over-year, fueled by a resurgence in household consumption, increased investment, and solid manufacturing activity.