India’s GDP estimate for FY25 is raised to 6.8% by Morgan Stanley

Morgan Stanley Boosts India’s FY25 GDP Figure to 6.8%, Signaling Vigorous Financial Force and a Favorable Expansion Viewpoint In the midst of Worldwide and Household Vulnerabilities. 

India’s New Delhi: Morgan Stanley has updated its GDP growth projection for the financial year 2024–25 (FY25) to 6.8% from 6.5%, following S&P Global’s methodology. Additionally, the company updated its growth prediction to 7.9 percent for the current fiscal year, FY24.
The updated estimates follow an upbeat assessment of India’s economic future, with Morgan Stanley praising the nation’s resilience and strength as defining characteristics of the current cycle.

The company expects the ongoing traction in industrial and capital expenditure activity to fuel a modest easing cycle in monetary policy.

Morgan Stanley reports that the prognosis for GDP growth in India is still positive, with growth in the fourth quarter of the fiscal year 2023–24 (QE Mar–24) predicted to be roughly 7%.

Broad-based growth momentum is anticipated, with a lessening of the disparities in capital expenditure between public and private sectors and between rural and urban consumers in FY25.
The company also sees a positive inflation trajectory, since headline inflation has been declining recently. Significantly weighted in the CPI basket, food inflation has eased, protecting against supply-side shocks.

Additionally, there has been a noticeable slowdown in core inflation, which has been attributed to relaxed supply chains and lessened price pressure.

Morgan Stanley projects that core inflation will be low at 4.1% while headline inflation is expected to average 4.5% in FY25, down from 5.4% in FY24.

The company believes that the disinflation trend will be aided by the continuance of supply-chain normalisation and a reduction in the pressure on commodity prices.

Morgan Stanley draws attention to possible risks arising from both domestic uncertainty and global issues, even in spite of the favourable economic forecast.

Risks to India’s growth and macroeconomic stability include tighter global financial conditions, increased commodity prices, and slower-than-expected global growth.
Close observation is necessary for domestic issues including policy mix changes and central elections.

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