Fitch Ratings has raised India’s GDP growth forecast for the current financial year, citing broad-based strength and robust quarterly GDP growth. The rating agency had previously projected a growth rate of 6% for 2023-24 but has now revised it to 6.3%. This upward revision is attributed to India’s strong economic performance, with the GDP growing by 6.1% year-on-year in the first quarter of 2023. Additionally, indicators such as auto sales, PMI surveys, and credit growth have remained robust in recent months.
Fitch’s Global Economic Outlook also highlighted the positive growth outlook for emerging markets, excluding China. The agency raised the growth forecast for these markets in 2023 to 2.9% from 2%. Notably, countries like Brazil, India, Mexico, and Russia are expected to see substantial improvements in their growth rates.
The Reserve Bank of India (RBI) has estimated a growth rate of 6.5% for the current fiscal year, while the government has forecasted growth in the 6.5%-7% range. Fitch’s revised growth forecast for India is one of the highest among major economies.
Despite the positive outlook, Fitch warned that India’s economy may be affected by slowing global trade. The full impact of the 250 basis points of monetary tightening is yet to be felt, and consumers have already experienced a drop in purchasing power due to increased inflation in 2022. Additionally, household balance sheets have been weakened by the pandemic.
Overall, Fitch’s upward revision of India’s GDP growth forecast reflects the country’s improved economic performance and highlights the ongoing strength of its various sectors. However, challenges related to global trade and domestic factors need to be closely monitored to ensure sustained growth in the future.
