Fitch Ratings, a major financial rating agency, has raised its forecast for Bharat’s economic growth. Originally predicting a growth rate of 7% in March, Fitch now expects Bharat to grow by 7.2% in the fiscal year 2024-25. This positive adjustment is due to a recovery in consumer spending and an increase in investments.
Looking ahead, Fitch forecasts Bharat’s growth to be 6.5% for the fiscal year 2025-26 and 6.2% for 2026-27. The agency’s Global Economic Outlook report highlights a strong expansion of 7.2% for the Bharatiya economy in the current fiscal year, slightly up from the 7% predicted in March.
Fitch attributes this optimistic outlook to rising investments and recovering consumer spending, driven by increased consumer confidence. Data from purchasing managers’ surveys indicate continued economic growth at the start of the financial year.
A normal monsoon season is also expected to support growth and stabilize inflation, although there are concerns about potential impacts from recent heatwaves.
Fitch also expects the Reserve Bank of India (RBI) to reduce policy interest rates by 25 basis points, bringing it down to 6.25% this year. This rate cut is anticipated to further boost economic growth by making borrowing cheaper for consumers and businesses.
Comparison with RBI’s Projections
Fitch’s growth projection aligns with the RBI’s estimate of 7.2% GDP growth for the fiscal year 2024-25. RBI Governor Shaktikanta Das has projected real GDP growth rates for each quarter of 2024-25, with Q1 expected to grow at 7.3%, Q2 at 7.2%, Q3 at 7.3%, and Q4 at 7.2%.
In the previous fiscal year, 2023-24, Bharat’s economy grew by 8.2%, with a notable expansion of 7.8% in the March quarter. This strong performance sets a solid foundation for the expected growth in the coming years.
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On a global scale, Fitch has also raised its forecast for world economic growth in 2024 to 2.6%, up from 2.4% predicted in March. China’s growth outlook has been adjusted to 4.8% from the previous 4.5%. However, Fitch expects global growth to slightly decrease to 2.4% in 2025, with slower growth in the US at 1.5% and a slight pickup in the eurozone to 1.5%. China’s growth is also expected to slow to 4.5% next year due to a deceleration in exports and government spending.
Overall, Fitch Ratings’ updated forecasts reflect a positive outlook for Bharat’s economy in the near term, driven by strong consumer spending and investment, despite potential challenges such as heatwaves and global economic fluctuations.
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