NEW DELHI: In its 2024 India Economics Outlook, Morgan Stanley said it expects India’s economic growth to be around 6.5% for FY2024 and FY2025, citing strong domestic demand supported by strength in corporate and financial sector balance sheets and the followthrough of policy reform measures that will aid India’s growth amid a global slowdown.
Interestingly, the optimism around India’s GDP was not just expressed by Morgan Stanley but has been voiced by several other bodies in the recent past. The Reserve Bank of India (RBI) estimates growth at 6.5% for FY24; Moody’s Investor Services retained India’s economic growth at 6.7% for 2023; and the International Monetary Fund (IMF) raised its 2023– 24 growth projection for India to 6.3% from its July estimate of 6.1%.
The country’s remarkable resilience amid a global slowdown buoyed by solid domestic demand is seen as a key reason behind these predictions. “A strong political mandate supporting reform measures alongside improvements in external demand would drive faster growth,” said the Outlook.
Morgan Stanley expects headline inflation to moderate to 4.9% in FY2025 from 5.4% in FY2024. “On the external balance sheet side, we expect the current account deficit to remain in a range of 1.5–1.7% of GDP in FY2025-26, steady terms of trade, and strength in net service exports,” it said. “India’s inclusion in the GBI-EM index from June 24 will likely support the balance of payments by augmenting capital flows and thus aiding the funding profile,” it added.
Morgan Stanley also expects private consumption growth to gather pace in the coming quarters as the gap narrows between rural and urban demand and between goods and services.
