India Economy Projected to Grow at 6.7% in FY24-25

The Organisation for Economic Co-operation and Development (OECD) has revised its forecast for the India economy, projecting GDP growth at 6.7% in FY24-25, an upward revision from the previously projected 6.6%. This positive outlook is driven by strong domestic demand and resilient global trade.

• The OECD report, Interim Economic Outlook, anticipates further growth in FY25-26, reaching 6.8%.
• India continues to be the fastest-growing large economy in the world, with robust domestic demand playing a key role.

India Economy Remains a Standout in Emerging Markets

While the global economy shows resilience and inflation moderates in key economies, India remains a standout performer among major emerging markets. The strong domestic demand, along with Brazil and Indonesia, has been instrumental in driving economic activity.

• India's growth contrasts with softer economic outcomes in Germany and Argentina, where output has contracted.
• The OECD report highlights that China's industrial production has been bolstered by exports, but consumer demand lags.

Inflation Outlook for India Economy

The OECD forecasts inflation in India to rise by 4.5% in FY24-25, a slight increase from its earlier estimate of 4.3%. However, inflation is expected to approach the Reserve Bank of India's (RBI) target of 4% by FY25-26. This comes as consumer inflation in India remained below 4% in July and August.

• The OECD highlights that the Indian economy's inflation outlook could be affected by geopolitical and trade tensions.
• Rising incomes and strong domestic demand are anticipated to further support the country's growth trajectory.

Key Factors Driving India Economy's Performance

Stronger-than-expected trade resilience, fueled by increased U.S. import growth and greater trade dynamism in key emerging markets, including India, has been a key factor behind the global economy's stable performance. The OECD noted that equity markets, including those in India, Brazil, and South Africa, have shown strength.

• While some advanced economies have experienced a credit growth recovery, tight lending standards continue to pose challenges.
• India's solid domestic demand is anticipated to drive steady growth over the next two years, with GDP projected at 6.7% for FY 2024-25 and 6.8% for FY 2025-26.

India Economy: A Bright Spot in the Global Landscape

The OECD report provides a positive outlook for the Indian economy, highlighting its robust growth trajectory and strong domestic demand. The India economy continues to be a key driver of growth in emerging markets, with a resilient performance despite global economic challenges.

• The report emphasizes the importance of strong domestic demand in driving the Indian economy's growth.
• The OECD's outlook underscores the India economy's positive prospects in the coming years, with GDP projected to continue expanding at a healthy pace.

Risks and Opportunities for India Economy

While the OECD report paints a positive picture of the Indian economy's growth prospects, it also acknowledges potential risks to the outlook. Geopolitical and trade tensions could pose challenges, and the report highlights the need for continued vigilance in managing inflation.

• However, the OECD report also emphasizes the potential for further growth driven by strong domestic demand and rising incomes.
• The report highlights the India economy's resilience in the face of global challenges and underscores the importance of continued policy support to maintain the current growth momentum.

Conclusion

The OECD report provides a positive assessment of the Indian economy's growth prospects, projecting strong GDP expansion in the coming years. The report highlights the robust domestic demand, resilient global trade, and the India economy's ability to withstand global economic challenges. However, the report also acknowledges potential risks, such as geopolitical tensions and inflation, and emphasizes the importance of continued policy support to sustain the current growth momentum.