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Rating agency Fitch has raised India's GDP estimates for the new financial year 2024-25 starting April 1, 2024. Fitch has increased India's economic growth forecast for the next financial year from 6.5 percent to 7 percent. The rating agency has decided to raise India's growth forecast for the current and next financial years due to strong growth in domestic demand and steadily rising business and consumer confidence.
Estimated to be 7% of GDP in 2024-25
We expect the Indian economy to continue growing and have raised the forecast for fiscal year 2024-25, announced in December 2023, by 50 basis points to 7 percent, Fitch said. Fitch said investment along with domestic demand will serve to boost economic growth. According to India's GDP data for the third quarter of October to December of the current financial year 2023-24 released by the Ministry of Statistics, India grew at the rate of 8.4 percent during the period. After this shocking figure, many rating agencies and financial institutions are increasing India's growth rate estimates for the next financial year. Fitch estimates India's GDP growth could be 7.8 percent in 2023-24, higher than the government's own estimate of 7.6 percent.
Growth will remain slow in the fourth quarter
Fitch said in its latest Global Economic Outlook report that the country's economic growth figures beat estimates every quarter, led by investment growth of 10.6 percent year-on-year and private consumption growth of 3.5 percent. According to Fitch, India's economic growth rate has been above 8 percent for three consecutive quarters. However, it is expected to reduce from 8 percent to 7.8 percent in the fourth quarter of the current financial year.
Loans will become cheaper in the second half of 2024
According to Fitch Ratings, consumer price inflation is expected to rise in the last month of 2023 due to rising food prices. The retail inflation rate was 5.7 percent in December 2023, which has come down to 5.1 percent in February 2024. According to Fitch, achieving RBI's target of bringing inflation rate to 4 percent will depend on food prices. However, the rating agency believes that if food prices stabilize, the inflation rate will fall to 4 percent by the end of 2024. According to rating agency Fitch, RBI may cut policy rates by 50 basis points in the second half of 2024.
Increase in global growth forecasts
Fitch Ratings has also decided to raise its global economic growth forecast for 2024. Fitch raised its global economic growth forecast for 2024 by 0.3 percent to 2.4 percent.
