‘At about 6%...’: S&P says India will be among the fastest growing economy in Asia-Pacific

S&P Global Ratings has said that India will remain the fastest growing economy among Asia Pacific nations, with a growth of 6 per cent. The ratings agency had predicted a growth of 6 per cent previously in March and retained the same. S&P kept the growth forecast unchanged from the March prediction partly due to domestic resilience. 

"We see the fastest growth at about 6 per cent in India, Vietnam, and the Philippines,” S&P Global Ratings said in its quarterly economic update for Asia-Pacific. It said that the medium-term growth outlook remains relatively solid. 

The report added that the Asian emerging market economies remain among the fastest growing ones in the global outlook through 2026, as per Louis Kuijs, Asia-Pacific chief economist at S&P Global Ratings.

Retail inflation is expected to soften to 5 per cent this fiscal from 6.7 per cent, according to S&P. It added that the RBI is expected to cut interest rates in the next year only. 

"In India, under the assumption of normal monsoons, we expect headline consumer inflation to soften to 5 per cent in fiscal 2024 from 6.7 per cent. 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 per cent--the centre of its target range,” Kuijs said.

In the same vein, Reserve Bank of India Governor Shaktikanta Das said in an interview yesterday that while inflation has softened to lower than 5 per cent due to measures initiated by the central bank as well as supply-side measures from the government, certain challenges still remain. He said that geopolitical tensions, El Nino prediction, and weather-related events might have an impact on inflation. 

The Monetary Policy Committee announcements earlier this month, had also lowered the inflation forecast for FY24 from 5.2 per cent to 5.1 per cent. 

(With PTI inputs)

Also read: RBI MPC meeting announcements: GDP growth projected at 6.5% for 2023-24