JPMorgan raised its 2024 economic forecast for India – but only marginally – saying the country’s growth will be affected by a slowdown in global growth momentum.
The investment bank raised its growth forecast for 2024 from 5% to 5.5%. The revision follows the latest gross domestic product data this week, which showed India’s economy accelerated by 6.1% in the January-March quarter, an increase from 4.5% in the previous quarter.
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The economy started the year on a “very strong note, with growth much faster, or much higher, than the market consensus was,” said DBS Bank senior economist Radhika. Rao.
The South Asian nation’s strong growth has been driven by a recovery in domestic demand for goods and services as well as strong exports.
“We reported on the continued strength of India’s services exports and how goods exports also performed better than expected,” JPMorgan said in a note.
There were also “several pockets of surprises on the upside, including manufacturing, construction and agricultural production… fixed asset investment growth also fared better,” Rao told “Street Signs Asia” on Thursday. from CNBC.
Economies that rely heavily on trade are losing steam, she said, but those like India that have focused on the “organic drivers” of growth are doing better.
However, JPMorgan still remains cautious about the country’s growth prospects next year.
Although the government has announced an increase in investment spending, it will take time for this to translate into a broader cycle of private investment.
Investment from India hasn’t ‘budged much’ in recent years, says Jahangir AzizHead of Emerging Markets Economics at JPMorgan.
“Over the past six months, we have seen a noticeable drop in foreign direct investment across the world,” Aziz said, adding that FDI in China and India plunged.
“Private investment in India has essentially stagnated… And public spending from government investment has stagnated at 7% over the past 10 years,” he pointed out.
The investment bank also expects India’s exports to decline as global growth slows as more advanced economies head into recession.
“Global growth momentum is expected to slow further in the coming quarters, and domestically the impact of monetary policy normalization will be felt with a lag,” JPMorgan said.