“India’s economic growth continues to exceed expectations. GDP growth for fiscal 2024 was revised upwards to 8.2%. However, we anticipate growth to moderate to 6.8% this fiscal year, due to high interest rates and a reduced fiscal boost tempering demand in the non-agricultural sectors,” the rating agency said in its Asia-Pacific economic outlook.
For FY26 and FY27, S&P forecasts India’s economy to grow by 6.9% and 7%, respectively.
S&P also revised its GDP growth projection for China, raising it to 4.8% from the earlier estimate of 4.6% for 2024. However, it expects a sequential slowdown in the June quarter, attributing it to a combination of subdued consumption and strong manufacturing, which may affect prices and profit margins.
The rating agency also predicts that the Reserve Bank of India (RBI) will lower its policy rate from 6.5% to 6% during the current financial year, with further reductions to 5.5% and 5.25% expected in FY26 and FY27, respectively.
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Notably, S&P’s growth estimates for India are more conservative than those of the RBI, which, in its latest monetary policy review, raised its growth projection for FY25 to 7.2% from the previous estimate of 7%.
