Morgan Stanley Revises India’s FY25 Growth Forecast To 6.7%
The downgrade comes in response to weaker-than-expected growth indicators in the second quarter, which is now projected to expand at a slower pace of 6.3 per cent
Morgan Stanley has revised its growth forecast for India in the financial year 2024-25, lowering it from 7 per cent to 6.7 per cent. The downgrade comes in response to weaker-than-expected growth indicators in the second quarter, which is now projected to expand at a slower pace of 6.3 per cent.
Despite this, the financial services firm expressed optimism about a recovery in the latter half of FY25, anticipating growth to rebound to around 6.7 per cent-6.8 per cent, supported by improved agricultural performance and increased government expenditure.
The report mentioned several factors influencing the economy’s trajectory. Government cash balances saw a decline in October and early November, a trend expected to spur higher spending in the coming months. Consumer activity showed mixed signals, with vehicle registration data for November reflecting a YoY drop in passenger vehicle sales but a rise in two-wheeler sales. Meanwhile, credit card usage demonstrated a positive shift, with post-festive spending this year outpacing last year’s levels, pointing to recovering consumer confidence.
Seasonal demand is also likely to play a crucial role in supporting growth during the December quarter. The wedding season, which features a higher number of auspicious days compared to last year, is anticipated to lift consumption further. These factors, combined with the anticipated pickup in government expenditure, are expected to help offset some of the challenges seen earlier in the fiscal year.
Morgan Stanley has maintained its growth projections for FY26 and FY27 at 6.5 per cent, underlining the sustained importance of domestic demand as a key driver for India’s economy in the medium term.
