India's GDP growth expected to slow to 6.3% in FY24: OECD economic outlook

The GDP growth is expected to further slow to 6.1 per cent in the next financial year (FY25), before rebounding in FY26

Don't want to miss the best from Business Standard?

The Organisation for Economic Cooperation and Development (OECD) on Wednesday retained its growth projection for India at 6.3 per cent for FY24 holding that surging services exports and public investment will continue to drive the economy. The organisation, however, said the economy will slow down to 6.1 per cent in FY25 due to adverse weather-related events and the weakening international outlook. 

“Inflation will decline progressively, with corresponding improvements of purchasing power. This, along with the end of the El Niño weather pattern, productivity gains from recent policy reforms, and improved global conditions, will help economic activity to strengthen, with projected real GDP growth of 6.5 per cent in FY 2025-26,” OECD said in its latest Economic Outlook.
 

The report further said that due to slower growth, inflation expectations, housing prices and wages will all eventually moderate.  This will help headline inflation converge towards 4.2 per cent, which will allow the Reserve Bank of India to start lowering interest rates from mid-2024 to 5.5 per cent by the end of 2025.

“While indicators suggest that India’s growth is stable for now, there are strong headwinds from heightened global uncertainty. In addition, the lagged impact of domestic policy tightening will continue to be felt, coupled with the disappointing dynamics of some socio-economic indicators, such as consumer goods’ sales, in rural areas,” the report said.