Mumbai: Leading global investment banking, securities and investment management firm, Goldman Sachs has revised India’s GDP growth forecast. The agency has raised its GDP growth forecast by 10 basis points (bps) to 6.7% for 2024. This revision was done on account of the bumper dividend by the Reserve Bank of India (RBI) and has also pushed back its expectations of interest rate cut by the central bank.
‘On domestic growth, high frequency indicators remain strong, with our proprietary consumption index tracking a recovery in Q1 (+7.8% YoY) underpinned by a nascent recovery in rural consumption and a sustained momentum in urban consumption indicators. Going forward, we expect investment growth momentum to sustain with extra fiscal space for infrastructure spending given a higher than expected dividend transfer by the RBI. As a result, we recently revised our growth forecasts for CY24 slightly higher by 10 bps to 6.7% YoY,’ Goldman Sachs analysts Santanu Sengupta, Arjun Varma and Andrew Tilton said in a note.
India’s growth momentum remains strong and they expect the core inflation will bottom out in April-June 2024 and be around 4.0% – 4.5% in H2CY24.
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Earlier, International rating agency ICRA Ltd has projected India’s GDP growth to moderate to a four-quarter low of 6.7% in Q4 of 2024. For the full fiscal year it expects GDP growth of 7.8%.
ICRA said it expects growth in gross value added (GVA) to ease to 5.7% in Q4 from 6.5% in the previous quarter owing to lower industrial and services growth, and agricultural GVA to contract for the second straight quarter (by 0.5%) amid weak trends in the rabi output and concerns around yields. GVA is the value of goods and services produced in a country minus input costs, including raw materials. It adjusts GDP by adding subsidies and deducting taxes on products.
ICRA expects the gap between GDP and GVA growth to moderate to about 100 basis points (bps) in Q4 from 185 bps in the previous quarter.
Earlier, the United Nations has revised upwards India’s growth projections for 2024. The World Economic Situation and Prospects released by the UN has showed this.
The 6.9 per cent economic growth projections for India in the mid-year update is an upward revision from the 6.2 per cent GDP forecast made by the UN in January this year. The UN World Economic Situation and Prospects (WESP) 2024 report that was launched in January had said that growth in India was projected to reach 6.2 per cent in 2024.
The projection in January for India’s GDP growth for 2025 remains unchanged at 6.6 per cent in the latest assessment of the economic situation.
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