Morgan Stanley, in its recent report titled ‘2024 Global Economic Midyear Outlook,’ suggests that India’s robust growth, already evident and accelerating, may become more widespread across both consumer and business spending sectors. The firm attributes India’s strong growth to three key megatrends: global offshoring, digitalization, and energy transition.
The investment bank forecasts a growth rate of 6.8 percent in 2024, slightly below the Reserve Bank of India’s projection of 7 percent, and anticipates a growth rate of 6.5 percent the following year. It predicts that inflation will remain within policymakers’ comfort zone.
While retail inflation in India stood at 4.83 percent in April 2024, the lowest in 11 months, it remains within the Reserve Bank of India’s comfort range of 2-6 percent but slightly above the ideal scenario of 4 percent. Despite inflation concerns in various countries, including advanced economies, India has managed its inflation trajectory well.
Morgan Stanley believes that India will benefit from stronger global growth, leading to increased income from exports and supporting domestic capital spending. The investment bank also highlights the potential for a faster-than-expected recovery in capital expenditures, driven by a favorable business environment and policy reforms.
India’s GDP grew significantly by 8.4 percent in the October-December quarter of the financial year 2023-24, maintaining its position as the fastest-growing major economy. With GDP growth rates of 7.2 percent in 2022-23 and 8.7 percent in 2021-22, India’s economy continues its robust expansion.
The size of India’s GDP currently ranks fifth globally, surpassing the UK in 2022, with an estimated value of around USD 3.7 trillion. Amitabh Kant, India’s G20 Sherpa and former CEO of Niti Aayog, projects that India is poised to overtake Japan as the fourth-largest economy by 2025.
Furthermore, S&P Global Ratings revised its rating outlook on India to positive from stable, citing expectations of continued economic reforms and fiscal policies regardless of the outcome of the Lok Sabha election. The agency emphasizes India’s robust economic growth, improved quality of government spending, and political commitment to fiscal consolidation as factors contributing to its positive outlook.
