Morgan Stanley Research has projected India's economic growth to hover around 6.5 per cent for both FY2024 and FY2025, driven by robust domestic fundamentals.
In its recently released "2024 India Economics Outlook," the investment bank's research arm highlighted the resilience of India's economy amidst global uncertainties, citing strong corporate and financial sector balance sheets and the positive impact of policy reforms.
As reported by Livemint, The research notes that domestic demand, supported by these factors, will play a crucial role in sustaining India's growth trajectory, even as the global economic landscape faces challenges.
The forecast comes at a time when geopolitical tensions in Israel raise concerns about potential impacts on oil prices, a factor that could affect India's inflation, import bills, fiscal deficit, and trade balance.
Morgan Stanley's projection aligns with other positive assessments of India's economic outlook.
Moody's Investor Service has maintained India's growth at 6.7 per cent for 2023, commending the country's resilience amid a global slowdown.
The International Monetary Fund (IMF) has revised its growth projection for India to 6.3 per cent for 2023-24, while the Reserve Bank of India (RBI) estimates a growth rate of 6.5 per cent for FY24.
Addressing inflation concerns, Morgan Stanley expects headline inflation to moderate to 4.9 per cent in FY2025 from 5.4 per cent in FY2024.
The report also anticipates the current account deficit to remain in the range of 1.5-1.7 per cent of GDP in FY2025-26, supported by steady terms of trade and strength in net service exports.
Furthermore, the inclusion of Indian bonds in JPMorgan's emerging market debt index from June 2024 is expected to attract more foreign inflows into the country, enhancing the balance of payments.
The report suggests that the RBI is likely to maintain interest rates until the first half of 2024, with a potential shallow rate cut cycle from June 2024, contingent on sustained moderation in inflation.
However, the outlook acknowledges potential risks, such as higher commodity prices, especially oil, impacting inflation and tighter global financial conditions affecting the currency and macro stability.
Nayan Dwivedi is Staff Writer at Swarajya.
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