Spanish Media Reports India’s Story: Growth remains above 6%

In the coming years, households are expected to shift their spending more towards services, including travel and leisure, rather than physical goods. Even with rising interest rates, household credit expansion is expected to continue strongly in 2024 and 2025, indicating rising market confidence.

The credit insurer’s report forecasts inflation to moderate from 5.7% in 2023 to 4.7% in 2024 and 4.5% in 2025, above the 4% target set by its central bank. No rate cut is expected in India before the third quarter of 2024, and a gradual normalisation of monetary policy adjustments is to be expected. 

Investment, the main driver of growth in 2023, will cool due to a weaker boost from public capital spending, while the private investment cycle will probably only pick up at a gradual pace. Public spending on infrastructure has been one of the main drivers of investment in recent years, but its support is set to wane due to fiscal prudence.

Although the conditions are in place for a broader revival of the private investment cycle, the report expects the rebound to be gradual as financing conditions are likely to remain tight for longer and the demand outlook is uncertain. 

Still high interest rates are limiting the recovery of private investment in 2024 and 2025. The expected moderation in external demand will slow the growth of goods exports in 2024, but certain segments, such as pharmaceuticals, will perform well. Overall, export growth is expected to increase in both 2024 and 2025.    (Pic credit-AFP thru’ ATALAYAR)