New Delhi, March 27: In a significant development, global brokerage firm Morgan Stanley has revised India’s GDP growth projection upwards to 6.8% in 2025 from the previous estimate of 6.5%, citing sustained momentum in industrial and capital expenditure activities.
The brokerage stated, “We raise GDP growth to 6.8% YoY in F2025, a rise of 30bps from our earlier estimate of 6.5%, on continued traction in industrial and capex activity. On CY basis, we expect growth at 6.8% YoY for 2024, from 6.4% earlier.”
Morgan Stanley anticipates GDP growth to hover around 7% in QE March-2024 with Gross Value Added (GVA) growth of 6.3%, leading to an F2024 GDP growth projection of 7.9%.
The brokerage envisions a broad-based growth trajectory in F2025, with the disparities between rural-urban consumption and private-public capital expenditure narrowing down.
Highlighting the steady expansion cycle, Morgan Stanley emphasized the role of improved productivity growth in ensuring macroeconomic stability.
Despite a moderating inflation trajectory and favorable current account deficit, the brokerage expects a delay in the easing cycle, pushed to 3Q24 from the earlier projected 2Q24. It also underscores the risks associated with potential delays or no easing, driven by better-than-expected trends in growth, capital expenditure, and productivity.
Morgan Stanley underscores the resilience of domestic demand as a cornerstone of India’s economic outlook, with consumption accounting for 60.3% of GDP. While private consumption has exhibited recovery over the past year, the trajectory is gradually converging with pre-pandemic levels.
As India’s economic landscape continues to evolve, Morgan Stanley’s upward revision reflects growing confidence in the country’s ability to sustain growth momentum amidst evolving global and domestic dynamics.
