India’s Economic Growth: Fitch Ratings Forecasts Robust Expansion

India's Economic Growth: Fitch Ratings Forecasts Robust Expansion

VoM News Desk | December 22, 2023 | 10:34 PM IST | Breaking News | Follow on Google News

India’s Economic Growth: Fitch Ratings Forecasts Robust Expansion

India’s Economic Growth: Fitch Ratings Forecasts Robust Expansion

Fitch Ratings has anticipated India’s substantial economic growth, expecting it to be among the world’s fastest-growing nations. The rating agency forecasts a resilient Gross Domestic Product (GDP) growth of 6.9 per cent for the financial year 2023-24 and 6.5 per cent for 2024-25.

In its report, Fitch highlighted that robust demand persists in various sectors like cement, electricity, and petroleum products, all surpassing pre-pandemic levels. India’s escalating infrastructure spending is projected to fuel increased steel demand, while the automotive sector is anticipated to continue growing, albeit at a moderated pace after robust expansion in 2023.

India currently stands as the fifth-largest economy globally, trailing the US, China, Germany, and Japan. Fitch’s projection indicates that by 2030, India’s GDP could surpass Japan’s, propelling it to become the second-largest economy in the Asia-Pacific region.

The rating agency believes India’s buoyant economic growth will drive corporate demand, offsetting weaknesses arising from sluggish growth in key international markets. Moreover, it anticipates increased profitability for corporations due to a decrease in input cost pressures, thereby maintaining sufficient rating headroom, despite heightened capital expenditure.

Regarding India’s Information Technology (IT) sector, while the report suggests a slowdown in demand from the US and eurozone, it also predicts a decrease in employee attrition and wage pressure, contributing to improved profitability.

Fitch also emphasized the cement and steel sectors’ ability to manage the rising demand in the economy, despite a faster influx of new capacity.

Additionally, various economic entities like the International Monetary Fund (IMF), Goldman Sachs Research, S&P, and the Reserve Bank of India (RBI) have offered optimistic growth projections for India, affirming the country’s strong macroeconomic stability and financial foundation.

The RBI, in particular, revised India’s GDP growth forecast upward for the financial year 2023-24, citing a more-than-expected 7.6 per cent growth in the July-September quarter and maintained a positive outlook for the subsequent fiscal year.

VoM News Desk

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