India's growth will be broad-based, says Morgan Stanley; forecasts 6.8% by 2024

Ronit Kawale
Ronit Kawale - Senior Editor
3 Min Read

Morgan Stanley has indicated that growth in India, which is already strong and growing, could become more broad-based on both the consumer and business spending sides.

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The global investment bank in its latest report '2024 Global Economic Midyear Outlook' has attributed India's strong growth to three megatrends – global offshoring, digitalisation and energy transition.

Morgan Stanley forecasts growth of 6.8 per cent in 2024 (against the RBI’s 7 per cent) and 6.5 per cent the following year, and believes inflation will remain within policymakers’ comfort zone.

Retail inflation stood at 4.83 per cent in April 2024, the lowest in the last 11 months. However, retail inflation in India is within the RBI's comfortable range of 2-6 per cent but above the ideal 4 per cent scenario. Inflation has been a concern for many countries, including advanced economies, but India has managed to control its inflation momentum to a large extent.

“We forecast India will benefit from stronger global growth, which will boost export earnings and support domestic capital spending,” Morgan Stanley said.

In the report, the investment bank said capital expenditure (which has grown multifold over the last decade) is likely to recover faster than expected due to a strong business environment and policy reforms.

India's GDP grew by a massive 8.4 per cent during the October-December quarter of FY 2023-24 and the country remained the fastest growing major economy. India's economy grew by 7.2 per cent in 2022-23 and 8.7 per cent in 2021-22.

Fourth quarter data is expected later this week.

India's economy grew by 7.2 percent in 2022-23 and 8.7 percent in 2021-22, respectively.

India's gross domestic product (GDP) currently ranks fifth after the US, China, Germany and Japan. It will overtake the UK in 2022.

Just a decade ago, India's GDP was the eleventh largest in the world. Currently, India's GDP is estimated to be around US$3.7 trillion.

Citing various macroeconomic parameters that are performing remarkably well, India's G-20 Sherpa and former Niti Aayog CEO Amitabh Kant has projected that the country will overtake Japan to become the world's fourth-largest economy by 2025.

On Wednesday, S&P Global Ratings revised its rating outlook for India to positive from stable and said it expects continuity in economic reforms and fiscal policies irrespective of the outcome of the Lok Sabha elections.

“Our positive outlook on India is based on its strong economic growth, significant improvement in the quality of government spending, and political commitment to fiscal consolidation. We believe these factors are coming together to benefit credit metrics,” the global rating agency said in a statement.

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