S&P Global Market raised growth forecast of China, still significantly lower than India

The S&P Global Market Intelligence has upwardly revised GDP forecasts for China in its latest report. But even with the revised forecast, China's GDP growth will be substantially lower than that of India.

According to S&P, India's GDP is projected to grow at a rate of 6.7 per cent in 2024 and 6.3 per cent in 2025. In contrast, China's economy is now forecasted to grow at 5.0 per cent in 2024 and forecast moderately raised to 4.6 per cent from 4.5 per cent.

The agency revised China's estimate due to policy tailwinds expected to extend into next year and a gradual improvement in private-sector sentiment within the country.

However, the Reserve Bank of India (RBI) in its monetary policy has raised the GDP forecast of India from 7 per cent to 7.2 per cent for FY25.

RBI Governor Shaktikanta Das said, "The real GDP growth for the current financial year 2024-25 is projected at 7.2 per cent with Q1 at 7.3 per cent, Q2 at 7.2 per cent, Q3 at 7.3 per cent, and Q4 at 7.2 per cent. The risks are evenly balanced."

RBI Governor further said that, "The GDP growth projection, we have increased it from 7 per cent to 7.2 per cent and the inflation projection, the average for the year, we have retained it at 4.5 per cent as it was in the last MPC meeting."

The S&P Global Market Intelligence however has lowered the growth forecasts of US, Canada, Brazil, and Japan for 2024, while it has revised upward the forecasts for China, the Eurozone, the UK, and Russia.

Additionally, the global growth forecast for 2025 has edged up from 2.7 per cent to 2.8 per cent, with higher forecasts for some of the larger countries, including the US and China.

Regarding Japan, the agency maintains that the next rate hike by the Bank of Japan is most likely to occur in October 2024, given the economic and inflationary headwinds.

In the Asia-Pacific region, the agency predicts that real GDP growth, excluding mainland China and Japan, will remain broadly stable at 4.4 per cent in 2024 and 2025, driven by robust domestic demand and recovering exports. A pickup in overseas demand is seen as the key growth driver for the region in 2024.