India’s GDP Growth: With rising borrowing prices and dwindling gains from the pandemic reopening, Goldman Sachs Group Inc. cut its prediction for India’s economic growth in 2019.
In a paper published on Sunday, Goldman economists led by Andrew Tilton predicted that the gross domestic product, which is expected to increase by 6.9% this year, may rise to 5.9% in the year 2023.
“Growth will likely be a tale of two halves, with a slower first half as the reopening boost fades, and monetary tightening weighs on domestic demand,” they wrote. “In the second half, growth is likely to re-accelerate as global growth recovers, drag from net exports diminishes, and investment cycle picks up.”
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India, which overcame the pandemic to reclaim the title of fastest-growing major economy in the fiscal year that ended in March, is finding it difficult to replicate that performance in the face of a number of obstacles, including a hawkish US Federal Reserve, higher consumer price growth, and widening fiscal and external deficits. According to Goldman, the investment cycle would start up in the second half of 2023, supporting a recovery in India’s development.
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India’s GDP Growth
Despite some loss versus the US dollar, the rupee is still among the best performing currencies in the region, according to Goldman Sachs, who also predicted that headline inflation will decline to 6.1% next calendar year from a projected 6.8% this year.
Due to inflationary threats, the Reserve Bank of India is expected to hike the benchmark interest rate by 50 basis points in December and another 35 basis points in February, reaching a terminal rate of 6.75%, according to Goldman economists. The benchmark rate is currently 5.9%.
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