RBI increases GDP growth forecast for FY24 to 7% amid geopolitical turmoil
Mumbai: The GDP growth projection for 2023-24 has been increased to 7%, from the previous estimate of 6.5%, Reserve Bank of India (RBI) Governor Shaktikanta Das said During the Monetary Policy Committee meeting announcements on Friday.
Governor Das stated that the anticipated GDP growth for Q3 is 6.5% and for Q4 is 6%.
The projections for real GDP growth in the first quarter of 2024-25 are 6.7%, followed by 6.5% in Q2 and 6.4% in Q3.
He emphasized that private consumption is expected to receive support from the gradual improvement in rural demand, the strengthening of manufacturing activity, and the sustained positive momentum in services.
“The healthy twin balance sheets of banks and corporates, high capacity utilisation, continuing business optimism and government’s thrust on infrastructure spending should propel private sector capex. The drag from external demand is also expected to moderate with a turnaround in merchandise and services exports. The protracted geopolitical turmoil, volatility in global financial markets and growing geo-economic fragmentations, however, pose risks to the outlook,” he said in the announcements.
“The global economy continues to remain fragile. World trade is decelerating amid a global tide of protectionism. Despite the significant restoration of the global supply chain, factors like elevated debt levels, lingering geopolitical hostilities and extreme weather conditions aggravate the risks to global growth and inflation outlook,” said Das, giving a view of the global economy.
Nevertheless, economic activity in India demonstrated resilience in the second quarter, propelled by robust domestic demand. The growth in GDP during this period was primarily fuelled by increased investment and government consumption, said Das.
“Investment activity continues to be aided by buoyancy in public sector capex. This is also reflected in the strong growth in steel consumption, cement production and imports of capital goods,” said Governor Das.
Das underscored that household consumption is sustained by resilient urban demand, highlighting the strength of durable goods. He noted that the festive-related demand is contributing to households engaging in discretionary spending during the third quarter.
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