In light of a positive surprise in the April-June quarter data, Morgan Stanley, the multinational investment bank, has revised its economic growth forecast for India for the fiscal year 2024. The bank has raised its projection from an earlier estimate of 6.2 percent to a more optimistic 6.4 percent. This upward revision is attributed to the strong performance of the Indian economy, driven primarily by robust domestic demand.
Q1 2024 GDP Growth Exceeds Expectations
The GDP growth rate for India during the first quarter of fiscal year 2024 surpassed expectations, coming in at 7.8 percent, higher than Morgan Stanley’s initial forecast of 7.4 percent. This positive surprise can be attributed to a more significant-than-anticipated growth in private consumption, as stated in a Morgan Stanley report.
Continued Momentum in Domestic Demand
Morgan Stanley highlights the sustained momentum in domestic demand as a significant driver of India’s economic growth. This momentum has led to GDP numbers exceeding expectations for two consecutive quarters. Factors contributing to this trend include strong Goods and Services Tax (GST) collections, credit growth, and a robust Purchasing Managers’ Index (PMI).
Expectation of Continued Resilience
The investment bank anticipates that India’s economic resilience will persist, supported by stronger balance sheets across various sectors of the economy. Additionally, the government’s proactive supply-side responses are expected to provide a secure foundation for a robust multi-year growth cycle.
Cautionary Notes on Potential Risks
While the outlook is positive, Morgan Stanley advises caution, pointing out potential risks that could impact India’s economic growth. These risks include weak global economic conditions, fluctuations in global commodity prices, and unforeseen “idiosyncratic” weather conditions.