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Research Capview Jittery Street – May 2024

Jittery Street – May 2024

Written by - Fisdom Research

May 19, 2024 3 minutes

Projected 2024 world GDP growth: 3.2%, US growth: 2.7%

The IMF has projected global GDP growth at 3.2% for the year, with a notable upward revision for the US to 2.7%.

       ProjectionsDifference from January 2024 WEO Update
AWorld Output3.
Advance Economies1.
1United States2.
2Euro Area0.40.81.5-0.1-0.2
6Other Advaned Economies1.82.02.4-0.1-0.1
BEmerging Market & Developed Economies4.
Emerging & Developing Asia5.
Source: IMF WEO, Aditya Birla Sun Life AMC

India’s Q3FY24 GDP numbers beat estimates

Strong GDP growth showcases India’s economic resilience and future optimism.

  • India’s real GDP surged by a remarkable 8.4% year-on-year in the October-December 2023 quarter, exceeding expectations and marking the highest growth rate in six quarters. This growth was underpinned by robust investments, particularly driven by government capital expenditure, coupled with a substantial improvement in the trade deficit and a pickup in consumption demand. Despite sluggish private sector investments, the economy benefited from strong government spending and expanding exports.
  • Looking ahead, sustaining this momentum will depend on continued government support, especially in the form of infrastructure spending and investment-friendly policies. Additionally, efforts to stimulate private sector investments and enhance consumption demand will be crucial for maintaining growth momentum.
  • Overall, while challenges remain, the strong performance in the December 2023 quarter indicates resilience in the Indian economy, suggesting a cautiously optimistic outlook for the coming quarters.

FY25 GDP growth projections upwardly revised

Agencies now expect India to grow by seven percent or near-to-seven percent during the current year. 

Agency/ InstitutionMonth of Release2023-242024-25
NSO, MOSPIFeb-247.6 —
RBI MPCApr-24— 7.0
RBI Forecasters Survey (Median)Apr-247.66.7
International Monetary Fund (IMF)Apr-247.86.8
World BankApr-247.56.6
Asia Development Bank (ADB)Apr-247.67.0
UNCTAD (Calendar year)Apr-246.76.5
Fitch RatingsMar-247.87.0
S& P Global RatingsMar-247.66.8
Source: CMIE, Fisdom Research
Agency/ InstitutionMonth of Release2023-242024-25
NCAERApr-24— 7.0
Ind-RaApr-24— 7.1
Bank of BarodaMar-24— 7.8
CITI BankMar-24— 6.8
NomuraApr-24 —7.0
Morgan StanleyApr-24 —6.8
UBS IndiaMar-247.67.0
Source: CMIE, Fisdom Research

Many of these expect a strong growth in private investments to drive overall expansion in the Indian economy. However, all forecasting agencies expect the Indian economy to slow during 2024-25 from the 7.6 percent growth estimated for last year.

No major concerns on the balance of payment front

We can expect a slight deterioration in April

Source: CMIE, Fisdom Research

Despite a relatively comfortable Balance of Payments (BoP) situation in the March 2024 quarter, challenges remain. While the merchandise trade deficit is reduced and the services trade surplus stabilized, net foreign direct investment (FDI) flows are expected to remain stagnant. However, gross external commercial borrowings nearly doubled, and although foreign portfolio investment (FPI) inflows decreased slightly, forex reserves increased by USD 22.4 billion. These developments, along with a slight appreciation of the INR against the USD, indicate a positive trend for the BoP in the March 2024 quarter.

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