S&P retains India FY25 GDP growth estimate at 6.8%; forecast lower than RBI

S&P Global Ratings on Monday retained India's GDP growth forecast for the current financial year at 6.8 per cent 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 per cent in fiscal year 2023-24.

"We expect growth to moderate to 6.8 per cent 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 per cent and 7 per cent, respectively.

S&P's estimates for FY'25 is lower than that of the Reserve Bank of India (RBI), which earlier this month projected the Indian economy to expand at 7.2 per cent 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 per cent in FY'25, the Asian Development Bank (ADB) estimates India's GDP to grow at 7 per cent. Moody's Ratings and Deloitte India estimates India's GDP to grow at 6.6 per cent in 2024-25 fiscal, while Morgan Stanley projects growth rate of 6.8 per cent.

For China, S&P raised its 2024 GDP growth forecast to 4.8 per cent, from 4.6 per cent 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.