How India's economy forced 5 global agencies to upgrade GDP forecasts

In recent years, India’s dynamic economic landscape has not only impressed but also compelled five influential global agencies—IMF, World Bank, Moody’s, Fitch Ratings and S&P Global, along with financial powerhouse Morgan Stanley—to revise their GDP forecasts upward. This surge in economic optimism reflects India’s resilience, policy reforms and robust growth drivers, positioning it as a key player in the global economic arena which has rightly captured the attention of global agencies tasked with forecasting growth and stability.

IMF

In its most recent World Economic Outlook report, the International Monetary Fund (IMF) has raised its growth forecasts for the Indian economy. The multilateral institution now anticipates a 6.8 per cent expansion in India’s real GDP for the year 2024 marking an increase from its earlier projection of 6.6 per cent. Looking ahead to 2025, the IMF has set a growth forecast of 6.5 per cent for India. This upward adjustment follows India’s strong economic performance in 2023, during which the country witnessed a notable 7.8 per cent expansion in its GDP.

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The country is also the world’s fastest growing economy.

World Bank

The World Bank while gauging the Indian economy at the beginning of this month said that the country’s growth continues to be resilient despite some signs of moderation in growth. “The World Bank has revised its FY23/24 GDP forecast to 6.3 percent from 6.6 percent (December 2022),” the World Bank said in its latest India Development Update, the World Bank India’s biannual flagship publication.

Moody’s

Moody’s Analytics was however cautious while predicting the growth of the Indian economy and kept it at 6.1 per cent in FY25.

“Economies in South and Southeast Asia will see some of the strongest output gains this year, but their performance is flattered by a delayed post-pandemic rebound. We expect India’s GDP to grow 6.1 per cent in 2024 after 7.7 per cent last year,” Moody’s Analytics said.

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Fitch Ratings

In March of this year, Fitch Ratings increased its GDP growth forecast for India to 7.8 per cent for the current year and 7 percent for 2024-25. This adjustment, characterized as “significant upward revisions,” is primarily credited to the improved outlook for emerging markets, excluding China, with particular emphasis on India.

According to its most recent ‘Global Economic Outlook,’ the rating agency noted that India’s economic growth has consistently surpassed quarterly predictions. Domestic demand has been robust, with investment growth rising by 10.6 per cent year-on-year and private consumption increasing by 3.5 per cent.

S&P Global

“For Asian emerging market (EM) economies, we generally project robust growth, with India, Indonesia, the Philippines, and Vietnam in the lead,” S&P said in its Economic Outlook for the Asia Pacific.

The ratings agency raised India’s growth forecast for the next financial year to 6.8 per cent against its November projection of 6.4 per cent in 2024-25 fiscal.

Morgan Stanley

In rising hope for the Indian economy, Morgan Stanley adjusted its GDP growth projections for the financial year 2024-25 (FY25), this month with a projection of 6.8 per cent expansion, up from its earlier estimate of 6.5 per cent.

Morgan Stanley credited India’s resilience and solidity as defining features of the present economic cycle.

What others say

Apart from the above projections on Indian economy, other agencies have also adopted a favourable position on the economic growth of the poll-bound South Asian nation.

On 14 November last year, Goldman Sachs predicted a “steady growth” for India in this year.

“In 2024, we expect macro-economic resilience to continue in India amidst steady growth at 6.3% yoy. The year will likely be a tale of two halves: Pre-elections, government spending will likely be the growth driver. Post-elections, we expect investment growth to re-accelerate, especially from the private side,” Goldman Sachs said in its India 2024 Outlook.

India’s economy is projected to grow by 6.5 per cent in 2024, according to a report by the UN which noted that multinationals extending their manufacturing processes into the country to diversify their supply chains will have a positive impact on Indian exports.

UN Trade and Development (UNCTAD) in its report released on Tuesday said that India grew by 6.7 per cent in 2023 and is expected to expand by 6.5 per cent in 2024, continuing to be the fastest-growing major economy in the world.

The expansion in 2023 was driven by strong public investment outlays as well as the vitality of the services sector which benefited from robust local demand for consumer services and firm external demand for the country’s business services exports, the report said, adding that these factors are expected to continue to support growth in India in 2024.

The report also noted the increasing focus by multinationals on India as a manufacturing base as they diversify their supply chains, a reference to China.

In the outlook, an increasing trend of multinationals extending their manufacturing processes into India to diversify their supply chains will also have a positive impact on Indian exports, while moderating commodity prices will be beneficial to the country’s import bill, it said.

The UNCTAD report further said the Reserve Bank of India is expected to keep interest rates constant in the near term, while restrained public consumption spending will be offset by strong public investment expenditures.

Last week, the Asian Development Bank adjusted its GDP growth projection for India in FY25 to 7 per cent, marking an increase from its previous forecast of 6.7 per cent. The bank attributed this upward revision to substantial investments both from the public and private sectors, along with the resilience exhibited by the services sector.

In an article as part of the World Economic Forum Annual Meeting, authors Sriram Gutta and Suchi Kedia, wrote, “Amidst a challenging global scenario, India has emerged as a significant economic and geopolitical power. Its actions in the coming year could lay the groundwork for the country to become the world’s third largest economy in the next five years and a developed nation by 2047, setting an example on inclusive, sustainable economic growth, digital development and climate action.”

Marching ahead

As the world grapples with large-scale violence between countries, a beacon of hope emerges in India’s rapid economic stride despite the global gloom surrounding wars and the world economy. The Indian economy is receiving a thumbs up as it triumphantly treads on a positive course.