Economic Outlook Remains Strong With 7.2% Growth Forecast For FY25: Report

After growth surged to 8.2 per cent in FY24, a report by Pantomath revealed that India’s economic outlook remains strong, with a 7.2 per cent growth forecast for FY25, driven by robust consumption and investment. The fiscal deficit was contained at 5.6 per cent of gross domestic product (GDP).

The Indian market remained volatile in early June following the final results of the 2024 Lok Sabha elections but eventually settled and rallied further in the second quarter of FY2025 followed by a strong Q1FY25 earning season, economic data and positive global clues. 

The BJP, despite a drop in seats compared to 2014 and 2019, secured 272 seats with allied support, leading to a total of 292 for the NDA. This is viewed positively for long-term economic growth, with ongoing optimism for policies and reforms, supporting a medium to long-term positive outlook for Indian equities.

The report added, “We have seen good monsoon development across country in the month of July and The IMD reiterated again above normal rainfall in August and September month as well. It's positive for overall economic growth and additionally for rural growth revival.”

The RBI's maintained growth forecast for the fiscal year 2024-25 remains optimistic at 7.2 per cent, despite indications of a slowdown. Overall, the RBI is navigating a complex economic environment with a focus on balancing growth with inflation control.

The Union Budget 2024-25 is viewed as financially and fiscally balanced, aiming to sustain economic growth. Devang Shah, Head of Retail Research, ACMIIL, said, “As per the recent update, so far Festival Season turned out to be good across all categories from consumer durables to Automobile. The customer preference shifted towards premiumisation. The moving forward Wedding season & Christmas will further help to continue this momentum.”

Global Outlook
The US economy grew at an annual rate of 3 per cent in the second quarter of CY2024 as per the Second estimate, up from 2.8 per cent in the initial estimate and 1.4 per cent in the first quarter. The upward revision was mainly due to increased consumer spending.

The US economy added 2,54,000 jobs in September 2024, significantly surpassing the revised 1,59,000 in August and forecasts of 1,40,000 marking the strongest growth in six months. This robust data reinforces Fed Chair Jerome Powell's view that the economy is in "solid condition," suggesting the Federal Reserve is not in a hurry to cut interest rates, which dampens hopes for a significant rate cut in November.

President Joe Biden announced he would not seek re-election and endorsed Vice President Kamala Harris as the Democratic nominee. However, analysts noted that Biden's decision was widely anticipated by the markets, and Donald Trump so far remains the favourite to win in November. Although, the presidential debate raised chances for a Kamala Harris election victory.

China reported second-quarter GDP growth of 4.7 per cent missing expectations of a 5.1 per cent growth. It's slower than the 5.3 per cent GDP increase in the first quarter. China's economy grew much slower than expected in the second quarter as a protracted property downturn and job insecurity knocked the wind out of a fragile recovery, keeping alive expectations Beijing will need to unleash even more stimulus. 

Notably, China has unveiled its largest set of economic stimulus measures since the pandemic in an attempt to kick-start growth in the world's second-largest economy.