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BUSINESS & TRADE MAY 30, 2025 | The Indian Eye 36

ASIAN ECONOMIES

Multiple reports back India’s strong growth this

year as Fitch downgrades China’s trajectory

Reserve Bank of India (RBI) has projected 6.5 per cent GDP growth for the fiscal year

2024-25; State Bank of India pegs growth around 6.4%

OUR BUREAU and core merchandise and services
exports on the demand side. The Fi-
New Delhi/Mumbai
nance Ministry too has estimated that
ndia’s economy is expected to the Indian economy will achieve a
maintain a stable growth trajectory growth of 6.5 per cent in FY25 despite
Iin the current fiscal year, with GDP considerable external headwinds.
projected to settle at 6.3 per cent with Meanwhile, Global rating agency
Q4 FY25 growth at between 6.4 and Fitch Ratings has raised India’s medi-
6.5 per cent, according to an SBI Re- um-term growth potential by 0.2 per-
search report. The report signals con- centage points to 6.4 per cent, while
tinued economic resilience amid evolv- it has reduced China’s growth pro-
ing global and domestic challenges. jection by 0.3 per cent to 4.3 per cent
The SBI research adds that de- from 4.6 per cent. The changes are
spite rising global uncertainties, in- part of Fitch’s revised assessment of
cluding trade disruptions and policy potential GDP growth for 10 emerg-
volatility, India’s economic momen- ing market economies over the next
tum remains largely resilient. five years.
The Reserve Bank of India (RBI), In its latest report, Fitch said,
however, has projected 6.5 per cent “Our estimate of India’s trend growth
GDP growth for the fiscal year 2024- The Fitch revision about India comes on the back of a sharper rise in India’s labor force partici- is slightly higher at 6.4 per cent, com-
25. SBI report notes that the GDP pation rate in recent years (File photo) pared with 6.2 per cent previously.
growth projections in its report are We think TFP growth will slow from
based on its in-house nowcasting recent years to be in line with its long-
model using 36 high-frequency indica- run average of 1.5 per cent.”
tors. The model reflects a slight mod- Pakistan misses growth target, The revision comes on the back
eration in activity, with fewer indica- of a sharper rise in India’s labor force
tors showing acceleration compared eyes $4.9 billion in external loans participation rate in recent years.
to the third quarter. While the agency expects this growth
The International Monetary Fund to continue, it may happen at a slower
(IMF) has projected India’s GDP at he Pakistani federal govern- sector declined by 1.14 per cent. pace going forward.
ment has reportedly fallen
Notably, the services sector post-
6.2 per cent in FY25 and 6.3 per cent Tshort of its economic growth ed a strong growth of 39 per cent Fitch highlighted that the revised
in fiscal 2026, driven by strong private target for the fiscal year 2024-25, between July and March, as per estimate for India shows a stronger
consumption, even as global growth achieving a growth rate of just 2.68 ARY News. contribution from labor inputs, main-
slows to 2.8 per cent in 2025. per cent against a projected 3.6 per In parallel, Pakistan is pre- ly total employment, rather than labor
Domestic positive factors such productivity. In contrast, the outlook
as easing household inflation expec- cent, as reported by ARY News on paring to raise USD 4.9 billion in for China has turned slightly less op-
external commercial financing for
Tuesday, citing sources from Paki-
tations and above-average monsoon stan’s National Accounts Commit- the next fiscal year (FY2025- 26), timistic. The agency has lowered Chi-
forecasts support demand and agri- tee. according to sources familiar with na’s supply-side GDP growth poten-
cultural growth prospects. According to ARY News, the matter. tial to 4.3 per cent from 4.6 per cent.
It added that while external risks According to the report, this
As part of its financing plan,
are mounting, India’s growth trajec- the report was revealed during a the government intends to secure is due to several reasons, including
meeting of the National Accounts
tory appears relatively stable, though Committee, chaired by Pakistan’s USD 2.64 billion in short-term weaker capital deepening. The ongo-
cautious optimism is warranted in the Secretary of Planning. loans from commercial banks at ing adjustment in the property market
short term, the report added. The meeting revealed that expected interest rates of 7-8 per has negatively affected overall invest-
It is to be noted that the March ment, which has played a role in the
edition of the Monthly Economic Re- the country’s economic output cent, without strict conditions or downgrade.
performance benchmarks, as per
reached USD 411 billion, with per
view of the Ministry of Finance added capita income increasing to USD ARY News. An additional USD Additionally, Fitch noted a slight-
that the performance of the econo- 1,824. Sector-wise performance 2.27 billion is also expected to ly steeper decline in the projected la-
my in the past quarters was driven by varied, with agriculture growing come through long-term borrow- bor force participation rate in China
strong agricultural and service sector by 1.8 per cent during the first ing arrangements from commer- and marginally lower TFP growth,
performance on the supply side and which is now estimated in line with the
a steady increase in consumption three quarters, while the industrial cial banks. five-year average ending in 2023.

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