China’s economic growth was downgraded by 0.2% to 4.6% in the calendar year 2024 by S&P Global Ratings, while India’s growth estimate for the fiscal year 2024–25 was kept at 6.8%.
According to the global rating agency’s quarterly economic outlook for the Asia-Pacific area, “In India, GDP growth moderated in the June quarter as high interest rates temper urban demand, in line with our projection of 6.8 for GDP for the full fiscal year 2024-2025.”
The Reserve Bank of India (RBI) can concentrate on bringing inflation in line with its aim because of India’s strong growth.
Additionally, the rating agency kept India’s 6.9% growth prediction for FY 2025–2026. In the meantime, S&P significantly lowered China’s GDP growth estimate for 2025 to 4.3%.
The government’s continued commitment to fiscal restraint and maintaining infrastructure as the primary priority of public spending was reaffirmed in the July budget.
Finance Minister Nirmala Sitharaman set aside a total of Rs 11.11 lakh crore for capital expenditures in the Budget 2024–25. Additionally, by FY 2025–2026, the central government hopes to reduce the fiscal deficit to less than 4.5 percent of GDP.
Since inflation is within the RBI’s goal range, October will see a first-rate cut in India.
The paper states that “The RBI views food inflation as a barrier to rate reductions. It believes that it will be difficult to keep headline inflation at 4% absent a significant and long-lasting slowdown in the rate of increase in food costs. Our prediction is still the same: we believe the RBI will start reducing rates as early as October and that it will do so twice during this fiscal year, which ends in March 2025.”
S&P lowered their estimate of China’s GDP growth to 4.6% from 4.8% for 2024. This is a reflection of the nation’s slow-moving real estate market, typically low domestic demand, and legislators’ unwillingness to loosen fiscal policy.
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