India GDP: Global rating agency S&P Global has updated its economic forecast for Asia-Pacific economies after the results of the US presidential election on November 25. According to the estimates of the rating agency, India’s GDP growth forecast for the coming financial year i.e. financial year 2025-26 has been reduced to 6.7 percent and for financial year 2026-27 to 6.8 percent. However, S&P Global has maintained its forecast of 6.8 percent GDP growth in the financial year 2024-25.
The rating agency said in one of its reports, “In India, we are seeing GDP growth declining to 6.8 percent in this financial year.” The agency estimates that India’s GDP will grow at the rate of 7 percent in the financial year 2027-28.
The latest report of S&P states that the continuously increasing food inflation is becoming an obstacle in the rate cut by the Reserve Bank of India (RBI). The rating agency expects that the central bank will cut its rates only once in this financial year 2023-24 i.e. before March 31.
The report also said, “Reduction in agricultural supply is driving consumer inflation, which has increased food prices, and all this is dependent on climate change, so it is difficult to predict when food inflation will stop. “Food inflation has recently become even more volatile.”
Why is food inflation important in RBI rate cut?
S&P has called food inflation important in RBI rate cut because it contributes about 46 percent to inflation, hence it cannot be ignored in rate cut. According to the agency, the central bank will probably remain alert by not reducing its policy rate too rapidly.
“China’s measures should boost growth,” the report said. “We expect US trade tariffs on exports to have a significant impact on China. Overall, the agency projects GDP growth of 4.1 percent in 2025 and 3.8 percent in 2026.” However, this is 0.2 percentage points (ppt) and 0.7 ppt lower than the September forecast.
The agency also said in the report that slow global demand and US trade policy will continue to hamper Asia-Pacific growth, but low interest rates and inflation should ease their pressure on spending capacity. At the same time, strong domestic demand in emerging markets will boost GDP growth.
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