According to a new report by Morgan Stanley, India’s GDP growth will remain above 6 percent in the next two financial years. The report titled ‘India Economics Mid-Year Outlook’ predicts growth at 6.2 percent in 2023-24 and 6.5 percent in 2024-25, thanks to a confluence of cyclical and structural tailwinds to drive growth momentum. Despite strong global headwinds, several international agencies have forecasted India to be one of the fastest-growing economies in 2023-24, sustained by robust growth in private consumption and sustained pick-up in private investment. The report expects macro stability to improve, and a shallow repo rate cut cycle from 1Q24.
Repo rates have been raised 250 basis points since May 2022, which helps suppress demand in the economy, thereby helping the inflation rate decline. The report also mentions the inflation outlook, projecting retail inflation to average in line with RBI’s projections for 2023-24 at 5.2 percent.
Morgan Stanley cited various policy reforms as reasons for India’s growth, including supply-side policy reforms, formalisation of the economy, Real Estate (Regulation and Development) Act, digitalizing social transfers, Insolvency and Bankruptcy Code, flexible inflation targeting, and a focus on FDI, among others. Morgan Stanley’s separate report said India has gained positions in the world order in the past ten years.
