JPMorgan raised its 2024 economic prediction for India only little, citing a slowdown in global growth impulses as a factor in the country’s progress.
The investment bank surged its 2024 growth estimate from 5% to 5.5%. The revision follows the latest GDP data this week that showed the Indian economy has increased by 6.1% in the January-March quarter, an increase from 4.5% in the previous quarter.
Radhika Rao, senior economist at DBS Bank, said, “The economy started the year on a very strong note as growth came in much faster, or much higher, than what the market consensus was.”
The South Asian country’s rapid expansion was fueled by increased local demand for products and services, as well as robust exports.
“We have been flagging the continued strength of India’s service exports and how goods exports are also doing cyclically better than had been expected,” JPMorgan’s representative said in a note.
Earlier on Thursday, Rao told CNBC’s “Street Sign Asia”, that, “There were also several pockets of upside surprises, including manufacturing, construction, and farm output … fixed capital investment growth has also fared better.”
She also proclaimed that economies heavily dependent on trade are losing momentum, but those like India that have been focused on “organic drivers” of development are managing better.
However, JPMorgan still exercises due diligence on the country’s growth prospects for the upcoming year.
Although the government has announced an increase in capital expenditures, it will take time for this to be reflected in a broader private investment cycle.
Jahangir Aziz, chief of emerging market economies at JPMorgan, said that investments from India have not “moved very much” in the last few years.
“In the last six months, we’ve seen a perceptible drop in foreign direct investments across the world,” Aziz said, adding that FDI in China and India both have downshifted.
“Private investments in India have essentially flatlined … And public spending from the government’s investments has flatlined at 7% for the last 10 years,” he emphasised.
The investment bank also anticipates decreasing exports from India as global growth decelerates in more advanced economies, which are typically heading towards a recession.
“Global growth momentum is still expected to slow in the coming quarters, and domestically, the impact of monetary policy normalisation will be felt with a lag,” JPMorgan stated.
- Published By Team Genuine Reporter