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India to Maintain Fastest Economic Growth in Asia Pacific, S&P Global Ratings Forecasts 6% Expansion

According to S&P Global Ratings, India is poised to maintain its position as the fastest-growing economy among Asia Pacific nations, with a projected growth rate of 6%. This growth forecast remains unchanged from S&P's previous prediction in March, reflecting the country's domestic resilience and overall economic strength.

In its quarterly economic update for Asia-Pacific, S&P Global Ratings stated, "We see the fastest growth at about 6% in India, Vietnam, and the Philippines." The report further highlighted that the medium-term growth outlook for India remains relatively solid. Louis Kuijs, Asia-Pacific chief economist at S&P Global Ratings, noted that Asian emerging market economies continue to be among the fastest-growing globally, with a positive outlook expected through 2026.



S&P Global Ratings also anticipates a softening of retail inflation in India, projecting it to decrease from 6.7% to 5% during this fiscal year. The agency attributes this expected decline to factors such as softer crude oil prices and a moderation in demand, which will likely lead to a reduction in fuel and core inflation, respectively. According to Kuijs, both inflation and the cycle of interest rate hikes have reached their peak. However, S&P expects the Reserve Bank of India (RBI) to implement interest rate cuts only in early 2024, as it closely monitors consumer inflation aligning with the target range of 4%.

Supporting S&P's assessment, Reserve Bank of India Governor Shaktikanta Das stated in a recent interview that inflation has already softened to below 5% due to measures undertaken by the central bank and supply-side initiatives from the government. However, Das highlighted potential challenges that could impact inflation, including geopolitical tensions, El Nino predictions, and weather-related events.

Earlier this month, the Monetary Policy Committee (MPC) announced a downward revision in India's inflation forecast for fiscal year 2024, lowering it from 5.2% to 5.1%. These adjustments demonstrate the RBI's commitment to maintaining price stability while facilitating economic growth.

India's position as the fastest-growing economy in the Asia Pacific region reinforces its resilience and potential for sustained expansion. Despite ongoing challenges, the country's economic prospects remain promising, with the RBI and government authorities implementing measures to support growth and manage inflation effectively. As the fiscal year progresses, policymakers will continue to monitor external factors that may influence India's economic trajectory.

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