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Fitch Ratings has raised its estimate of India’s gross domestic product (GDP) growth rate for the next financial year 2024-25 to seven percent on strong domestic demand and improvement in business and consumer confidence.

During the third quarter (October-December) of the current financial year, the country’s economy grew at a better than expected rate of 8.4 percent. In such a situation, Fitch estimates that the economic growth rate in the current financial year 2023-24 will be 7.8 percent. This is slightly higher than the government’s estimate of 7.6 percent.

The rating agency in its latest ‘Global Economic Outlook’ said the country’s economic growth is outperforming quarterly estimates with domestic demand rising. Investment growth grew 10.6 percent year-on-year, while private consumption was 3.5 percent higher.

Along with this, Fitch Ratings has also increased its global growth forecast for 2024 by 0.3 percentage points to 2.4 percent. The rating agency believes that growth prospects have improved in the near future.

“We expect the Indian economy to continue its strong expansion, with real GDP forecast to increase 7 per cent in FY25, a 0.5 percentage point upward revision from our December forecasts,” Fitch Ratings said.
“Domestic demand, especially investment, will be the main driver of growth, amid sustained levels of business and consumer confidence.” Its forecasts imply that growth in the short term will outpace the economy’s estimated potential, and that the pace of growth of activity will then moderate towards trend in FY25, with real GDP rising 6.5 per cent.

Fitch Ratings has increased its US growth forecast to 2.1 percent. In the global economic outlook for December 2023, this estimate was 1.2 percent.

It said, “Due to better US growth prospects, the slight cut in China’s growth forecast has not been affected. China’s growth rate estimate has been reduced from 4.6 to 4.5 percent.
Along with this, Fitch Ratings has revised the Euro area growth forecast from 0.7 percent to 0.6 percent.