May 27th 2024.
In recent news, the esteemed financial firm Goldman Sachs has made an update to their prediction for India's GDP growth. They have revised it by a small margin of 10 basis points, now forecasting a growth rate of 6.7 per cent. This is due to their belief that the Indian government will continue to invest heavily in large-scale infrastructure projects, with the added boost of a substantial dividend from the Reserve Bank of India.
Andrew Tilton, the head of emerging markets economic research at Goldman Sachs, explained in a statement that their forecast was influenced by the expected persistence of investment growth, thanks to the government's surplus budget for infrastructure spending. This has led them to adjust their growth forecast for 2024, increasing it by 10 basis points to 6.7 per cent.
Goldman Sachs also shared their thoughts on India's current economic state, stating that growth momentum is still strong. They also anticipate that core inflation will hit its lowest point in the second quarter of the year, but will then stabilize at around 4.0 to 4.5 per cent in the following months of July to December.
Despite this positive outlook, the financial company mentioned that members of the Reserve Bank of India's monetary policy committee have expressed concern over rising food inflation. They may wait to see the progress of the monsoon and the sowing of summer crops before making any decisions on monetary policy easing. Due to these factors, Goldman Sachs has decided to push back their predicted rate cut from the RBI by one quarter, now expecting it to happen between October and December. Their report suggests that the first cut will most likely take place during the December 2024 meeting.
Interestingly, the release of this report coincides with the Indian Meteorological Department's confirmation of above-average monsoon rains for this year. This is expected to boost production in the agricultural sector, which was negatively impacted by unpredictable weather conditions last year. Overall, it seems that India's economy is moving in a positive direction, with the potential for even more growth in the future.
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