Fitch revises India FY24, FY25 GDP forecast upwards, expects economy to continue 'strong expansion'

Fitch Ratings on Thursday revised India's gross domestic product (GDP) growth forecast for the ongoing and the next financial year upwards, as it expects the economy to continue its strong expansion. However, it has trimmed forecast for China, given the ongoing property crisis in the nation.

The ratings agency in its March Outlook report said expects India's real GDP for FY25 to grow by 7 per cent, a 0.5 percentage points upwards revision. "Prospects for EM ex China have also brightened, particularly in India, where we now expect growth to reach 7.8% in FY24 and 7.0% in FY25, both sizeable upward revisions," Fitch said in its report.

The Indian government recently increased the forecast for FY24's GDP growth to 7.6 per cent from 7.3 per cent previously.


Fitch expects domestic demand, especially investment, to be the main driver of growth in India, amid sustained levels of business and consumer confidence.

"Our forecasts imply that growth in the short term will outpace the economy’s estimated potential, and that the pace of growth of activity will then moderate towards trend in FY25, with real GDP rising by 6.5 per cent," Fitch said.

Retail inflation in India stood unchanged at 5.1 per cent in February, with core inflation measures continuing their steady decline.

"This underlines that developments in food prices will be key to inflation developments and the pace at which inflation will approach the Reserve Bank of India’s 4% mid-point of its 2-6% target band," Fitch wrote.

Global outlook

Furthermore, Fitch cut China’s 2024 forecast to 4.5 per cent from 4.6 per cent, reflecting a deterioration in the outlook for the property sector and growing evidence of deflationary pressures. "But the authorities have been stepping up fiscal support and this has cushioned the impact on the forecast," Fitch said.

The rating firm has raised its 2024 global GDP growth forecast by 0.3 percentage points to 2.4 per cent, noting that the near-term world growth prospects have improved.

Forecast for the US has been hiked to 2.1 per cent from 1.2 per cent in its December 2023 outlook.