S&P Global released its Economic Outlook Asia-Pacific Q2 2024 report, offering insights into the region’s economic landscape. The report focuses on GDP growth forecasts for various economies, factors influencing growth trajectories, and expectations regarding monetary policy adjustments.
India’s GDP Growth Projections:
- S&P Global raises India’s GDP growth forecast for FY25 to 6.8%, a 40 basis points increase, contrasting with the government and central bank’s projection of 7%.
- Anticipates India to achieve a growth rate of 7.6% in FY24, positioning it among the top growth performers in the region.
- Retains GDP growth predictions for FY26 and FY27 at 7%, showcasing sustained growth momentum.
Factors Impacting India’s Growth:
- In domestic demand-led economies like India, Japan, and Australia, high interest rates and inflation have subdued household spending, impacting sequential GDP growth in the latter half of FY24.
Expected Monetary Policy Adjustments in India:
- Forecasts rate cuts of up to 75 basis points in India during 2024, driven by factors such as slowing inflation, reduced fiscal deficit, and lower US policy rates.
- Expects the Reserve Bank of India to initiate rate cuts, likely commencing from June 2024 or later, contingent on further clarity on the path of disinflation.
- Anticipates rate adjustments in line with projections for US policy rates, with significant moves expected in the latter half of the year.
China’s GDP Growth Outlook:
- Forecasts a slowdown in China’s GDP growth to 4.6% in FY25 from 5.2% in FY24, considering ongoing property weaknesses and modest macro policy support.
- Identifies deflation as a potential risk, contingent upon sustained weakness in consumption and corresponding government interventions to stimulate manufacturing investment.
Developed Economies in Asia-Pacific:
- Expects growth to accelerate in trade-dependent economies like South Korea, Taiwan, and Singapore.
- Forecasts a decline in relatively domestic demand-led economies such as Japan and Australia.