Morgan Stanley Downgrades India's GDP Forecast Amid Slowdown

Morgan Stanley has revised India's GDP growth forecast for FY25 from 6.7% to 6.3% following a slowdown in the July-September quarter of 2024. The bank highlights resilience in the services sector and anticipates a recovery in the second half of FY25, driven by various economic factors.

Morgan Stanley, a leading multinational investment bank, has adjusted its forecast for India's GDP growth, lowering it from 6.7% to 6.3% for the fiscal year 2025. This revision comes in response to a deceleration in economic growth observed in the quarter ending September 2024, where GDP expansion fell to 5.4% year-on-year.

The economic slowdown, the steepest since March 2023, was attributed to underwhelming performances in both private consumption and capital expenditure. Despite private consumption growing by 6%, it outpaced capital expenditure, which increased by only 5.4%. Meanwhile, the services sector showed resilience with a growth rate of 7.1%, whereas the industry sector lagged behind at 3.9%, impacted by manufacturing and electricity downturns.

Nonetheless, Morgan Stanley remains optimistic about a rebound in the latter half of FY25, with projections of GDP growth reaching 6.6%. Factors such as a strong festive season, government spending, improved rural demand, and easing financial conditions are expected to drive this recovery. As the Reserve Bank of India reviews its monetary policy, liquidity conditions and inflation rates will be crucial considerations. (ANI)

(With inputs from agencies.)