Indias Economic Growth To Face a Downturn in 2024-2025 Financial Year
The S&P predicts that India’s economic growth will likely slowdown in the upcoming fiscal period.
Predictions by a global rating agency, S&P state that India’s economic growth will likely be at an anticipated gross domestic product (GDP) of 6.9 percent in the financial year 2024-25. This is an after-effect of the rapid decrease in the inflation rate from 6.8 percent to five percent in the current fiscal year. The S&P has been monitoring India’s GDP for almost a decade and concluded that the expected growth percentage for the upcoming fiscal year has undergone a mere slowdown to that of the current fiscal period.
The Indian economy was critically controlled by domestic demands in the previous years, which has undergone a paradigm shift per the global cycles. The stock market index has predicted that rising commodity exports in the Indian economy have likely slowed down the year-on-year GDP growth to nearly 4.4 percent in the fourth quarter (Q3 FY23).
Moreover, the pronounced core inflation in India has suggested a substantial slacking in the economy. The Reserve Bank of India is anticipated to raise its high policy rates furthermore post the downturns of inflation accordingly. As a result, the consumer price index (CPI) inflation rate of India will likely become moderate to five percent in the upcoming year, which may be encountered by upside risks like weather-related factors.
The RBI managed to increase the repo rate by 250 basis points to almost 6.5 percent in the previous fiscal year. With the current account balances of energy-importing economies in the APAC region deteriorating, the external deficit has faced a downfall and reached nearly 3-3.5 percent of GDP. The S&P Global Ratings however holds a cautiously optimistic outlook for the APAC arena in the current financial period, inconsiderate of India’s inflation condition. Further, external pressures from rising US interest rates will likely lift the interest rates in the arena accordingly.
