JPMorgan raises 2024 GDP forecast for India, but says headwinds remain

JPMorgan says India's 6.1% GDP growth in January-March quarter is not surprising

JPMorgan, which raised its 2024 economic forecast for India – but only slightly – said the country’s growth would be hit by a slowing global growth momentum.

The investment bank has raised its growth forecast for 2024 from 5% to 5.5%. The revision follows this week’s latest gross domestic product data showing India’s economy accelerated by 6.1% in the January-March quarter, up from 4.5% in the previous quarter. .

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CNBC expert

DBS senior economist Radhika Rao said the economy started the year with “a very strong sign as growth was much faster, or much higher than consensus”. of the market”.

The South Asian nation’s strong growth has been fueled by a surge in domestic demand for goods and services as well as strong exports.

“We’ve highlighted the continued strength of India’s services exports, and the way commodity exports are also performing better cyclically than expected,” JPMorgan said in a note.

There are also “a number of bullish surprises, including manufacturing, construction and agricultural output… fixed capital investment growth is also better,” Rao told “Street Signs Asia” of CNBC on Thursday.

Economies that rely heavily on trade are losing momentum, she said, but those like India that focus on the “organic drivers” of growth are doing better.

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However, JPMorgan remains cautious about the country’s growth outlook for the coming year.

Although the government has announced an increase in capital spending, it will take time for that to translate into a broader cycle of private investment.

Investments from India have not “moved much” in the past few years, said Jahangir AzizHead of Emerging Markets Economics at JPMorgan.

“Over the past six months, we have seen a marked decline in foreign direct investment worldwide,” Aziz said, adding that FDI in both China and India fell.

“Private investments in India have remained essentially unchanged… And public spending from government investments has remained flat at 7% over the past 10 years,” he stressed.

The investment bank also expects exports from India to fall as global growth slows with more advanced economies heading for a recession.

“Global growth momentum is expected to remain sluggish in the coming quarters, and domestically, the impact of monetary policy normalization will be felt more slowly,” JPMorgan said.


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