India’s economic growth forecast for fiscal 2024 has been raised by the Economists at Nomura and Morgan Stanley, on Friday, following India’s stellar Q1 GDP data, which showed the economy growing at its quickest pace in a year in the April-June quarter.
However, Economists at BofA Global Research slashed their estimates as quarterly growth missed their forecast.
Nomura now expects India’s gross domestic product (GDP) to rise 5.9 per cent for the year ending March 2024, up from the 5.5 per cent expected earlier. Morgan Stanley raised it to 6.4 per cent from 6.2 per cent earlier.
India’s first-quarter GDP rose at 7.8 per cent on an annual basis, on the back of strong services activity and robust demand.
The print was an acceleration from the March quarter’s 6.1 per cent growth and above a Reuters poll forecast of 7.7 per cent rise.
“We expect the resilience to be sustained,” said Upasana Chachra, chief India economist at Morgan Stanley.
“Stronger balance sheets across economic agents and the government’s proactive supply-side response ushering in structural reforms are likely to provide a secure foundation to a strong multi-year growth cycle,” she said.
BofA economists slashed their fiscal 2024 forecast to 6.3 per cent from 6.5 per cent as the first-quarter number was far below their 9.1 per cent year-over-year estimate.
“The improvement in Y/Y terms masks a sharp sequential decline seen in case of both GDP and GVA (Gross Value Added),” noted BofA economist Aastha Gudwani.
June quarter real GDP fell 7.4 per cent quarter-on-quarter compared with a median 4.4 per cent contraction typical of first quarter, she added. “In fact, versus pre-Covid history (since 2011), this is the sharpest QoQ fall seen in GDP.”
Both BofA and Nomura flagged below-normal 2023 rainfall predictions hitting agriculture growth.
Nomura lowered the country’s fiscal 2025 GDP growth rate to 5.6 per cent from 6.5 per cent, citing weak monsoons, higher food inflation, likely slowdown in government capital expenditure, and sluggish global growth pressuring domestic demand.
Goldman Sachs and Barclays, meanwhile, kept their forecasts for fiscal 2024 unchanged at 6.4 per cent and 6.3 per cent, respectively, with Barclays seeing a modest upside risk to their forecast.
“Domestic demand is likely to anchor GDP growth, but some moderation may come from weaker manufacturing and exports in a global slowdown. We forecast continued steady GDP growth of 6.5 per cent in FY24-25,” said Rahul Bajoria, Barclays’ head of EM Asia (ex China) economics research.
(With inputs from Reuters)
Source: republicworld.com
