S&P Retains India's FY25 GDP Growth Estimate At 6.8%

S&P Global Ratings on Monday retained India's GDP growth forecast for the current financial year at 6.8% and said high interest rates and lower fiscal spur would temper demand.

In its economic outlook for Asia Pacific, S&P Global Ratings said India's economic growth continues to surprise on the upside with the economy growing 8.2% in fiscal year 2023-24.

"We expect growth to moderate to 6.8% this fiscal year, with high interest rates and lower fiscal spur tempering demand in the non-agricultural sectors," it said.

For the fiscal years 2025-26 and 2026-27, S&P projected growth rates of 6.9% and 7%, respectively.

S&P's estimates for FY'25 is lower than that of the Reserve Bank of India, which earlier this month projected the Indian economy to expand at 7.2% in the current fiscal, on the back of improving rural demand and moderating inflation.

While another rating agency Fitch estimates India's growth at 7.2% in FY'25, the Asian Development Bank estimates India's GDP to grow at 7%. Moody's Ratings and Deloitte India estimates India's GDP to grow at 6.6% in 2024-25 fiscal, while Morgan Stanley projects growth rate of 6.8%.

For China, S&P raised its 2024 GDP growth forecast to 4.8%, from 4.6% but sees a sequential slowdown in the second quarter. The combination of subdued consumption and robust manufacturing investment will weigh on prices and profit margins, it said.