Goldman Sachs Raises India GDP Growth Forecast to 6.7%
Goldman Sachs has adjusted its outlook on India GDP Growth, raising the GDP forecast for 2024 by 10 basis points to 6.7%. This upward revision is attributed to sustained growth momentum and increased fiscal space, supported by a significant dividend transfer from the Reserve Bank of India (RBI).
Analysts at Goldman Sachs highlighted the robust growth momentum in India. They noted that high-frequency indicators, especially their proprietary consumption index, indicate a strong recovery in the first quarter with a year-on-year growth of 7.8%. This recovery is underpinned by a nascent revival in rural consumption and sustained momentum in urban consumption.
The significant dividend transfer from the RBI has provided additional fiscal space for infrastructure spending. This increased fiscal capacity is expected to sustain investment growth momentum. As a result, Goldman Sachs revised its growth forecast for calendar year 2024 slightly higher, projecting a 6.7% year-on-year increase.
Goldman Sachs anticipates core inflation to bottom out in the April-June quarter of 2024, expecting it to stabilize around 4.0% to 4.5% in the second half of the calendar year. Despite this, members of the RBI’s Monetary Policy Committee (MPC) remain cautious due to persistent food inflation driven by supply-side disruptions and ongoing hot weather conditions in many parts of India.
The analysts stated, “In our view, they may want to see the progress of the monsoons and the sowing of the summer (Kharif) crop to assess the food inflation trajectory in the second half of CY24 before pivoting towards monetary policy easing.”
Taking these factors into account, Goldman Sachs has postponed its expectation for the first RBI rate cut from the July-September quarter to the October-December quarter of 2024. The first rate cut is now anticipated in the December 2024 meeting, with a total easing cycle of 50 basis points expected—25 basis points each in Q4 2024 and Q1 2025.
The timing of the rate cut remains complex due to strong domestic growth and persistent food inflation, making some RBI MPC members hesitant to pivot towards monetary easing. The analysts noted, “The timing of the first rate cut by the RBI remains a difficult question as domestic growth remains strong, which, along with a sticky trajectory for food inflation, has meant that some RBI MPC members may be reluctant to pivot towards monetary policy easing.”
In the broader global context, there is also uncertainty regarding the US Federal Reserve’s rate easing cycle. Goldman Sachs now expects the Fed to begin its rate cuts in September 2024, delayed from the previously anticipated July, with two cuts anticipated within the year—one in September and another in December.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Newscazt. Please check with certified experts before making any investment decisions.
Also See
Lok Sabha Election Enters Penultimate Phase
Delhi Children’s Hospital Fire Claims 7 Newborn Lives, Several Critical
4 Labourers Buried Alive While Digging Well in Jharkhand
Jharkhand Teen Axed to Death by Brothers Over Love Affair
——————————————————————————-
At Newscazt, we strive to bring you the latest news and stories from India, World, Business, Sports, Entertainment and more. Our team of experienced journalists and writers are committed to delivering accurate and unbiased news and analysis. It would mean the world to us if you follow us on Twitter, Instagram and Facebook.
