S&P retains FY24 India growth projection at 6%; fastest growing in Asia Pacific

S&P Global Ratings on Monday retained India's GDP growth forecast at 6% saying it will be the fastest-growing economy among Asia Pacific nations.

The GDP growth forecast for the current and the next fiscal has been kept unchanged from the forecast made in March partly on account of domestic resilience.

"We see the fastest growth at about 6% in India, Vietnam, and the Philippines, S&P Global Ratings said in its quarterly economic update for Asia-Pacific.

"The medium-term growth outlook remains relatively solid. The Asian emerging market economies remain among the fastest growing ones in our global growth outlook through 2026," said Louis Kuijs, Asia-Pacific chief economist at S&P Global Ratings.

S&P said retail inflation is likely to soften to 5% this fiscal from 6.7%, and the RBI is expected to cut interest rates only early next year.

"In India, under the assumption of normal monsoons, we expect headline consumer inflation to soften to 5% in fiscal 2024 from 6.7%. Softer crude prices and tempering of demand will bring down fuel and core inflation, respectively.

"The inflation and rate hike cycles have peaked, in our opinion. But we expect the Reserve Bank of India to cut rates only in early 2024, as it wants to see consumer inflation moving to 4%--the centre of its target range," Kuijs said.

S&P has lowered the growth forecast for China to 5.2% from 5.5% for 2023.

"For the rest of the region, we have left it broadly unchanged, in part because of domestic resilience," S&P said.