On 25th November 2024, S&P Global Ratings (previously known as Standard & Poor’s) released its latest “Economic Outlook Asia-Pacific Q1 2025: US Trade Shift Blurs the Horizon”. It has lowered India’s Gross Domestic Product (GDP) growth projection for Financial Year 2025-26 (FY26) to 6.7% from its previous estimate of 6.9% and for FY27 to 6.8% from 7%.
- However, it has retained its growth forecast for the current financial year (FY25) at 6.8%. This projection is based on the prevailing high interest rates and reduced fiscal support, dampening urban demand.
- It has also projected that the Indian economy will grow at 7% in FY28.
Note: S&P’s growth projection for India’s GDP for FY25 is still lower than that of the Reserve Bank of India (RBI)’s projection of 7.2% for FY25.
India-Specific:
i.The report noted that Purchasing Manager Indices (PMI) remain strong, but other high-frequency indicators suggest temporary slowing of momentum, mainly due to a setback in the construction sector during the September quarter.
ii.The report underscored that climate change-related disruptions and supply shocks in the agriculture sector are the main contributors to rising food prices in the country, which is further delaying rate cuts by the RBI.
iii.The Global Ratings Agency has increased its inflation projection for India to 4.6% for FY25, from its previous estimate of 4.5%.
- While it has lowered its inflation projection for FY26 to 4.4%, down from the earlier estimate of 4.6%, but likely to increase again to 4.6% in FY27.
Global Scenario:
i.The report also highlighted that impending change in the United States of America(USA) administration will pose challenges for China and the rest of Asia-Pacific region.
ii.The report has projected overall GDP growth for the Asia-Pacific region (including China) in 2024 at 4.5%, from its previous estimate of 4.4%.
- It has also been estimated that the Asia-Pacific region will grow at 4.2% and 4.1% in 2025 and 2026, respectively.
India’s GDP Projections by various Rating Agency for FY6:
i.The International Monetary Fund (IMF) in its October 2024 World Economic Outlook (WEO) report has retained India’s Gross Domestic Product (GDP) growth forecast at 6.5% for FY26.
ii.The World Bank has estimated India’s GDP growth forecast at 6.7% for FY26 (2025-26).
iii.The RBI in its 4th bi-monthly Monetary Policy of FY25 released in October 2024, has projected India’s GDP at 7.1% for FY26.
About S&P Global Ratings:
President- Martina L. Cheung
Headquarters- New York, the United States of America (USA)
Founded – 1860
