JPMorgan & Co., the American financial services company, has reportedly increased its economic forecast 2024 for India. It also recommended caution due to a global slowdown.

The investment bank raised its growth estimation from 5% to 5.5%, taking into account the latest data showing India's economy expanding by 6.1% in the January to March quarter, up from 4.5% in the previous quarter.

The strong growth in India was driven by increased domestic demand for goods and services, as well as robust exports. JPMorgan acknowledged the strength of India's service exports and the better-than-expected performance of goods exports. The manufacturing, construction, and farm sectors also experienced positive growth, along with improved fixed capital investment.

The senior economist at DBS Bank Radhika Rao noted that India started the year with impressive growth, surpassing market expectations. She highlighted India's focus on "organic drivers" of growth, which has contributed to its resilience compared to trade-dependent economies.

However, JPMorgan maintains a cautious stance on India's growth prospects for the next year. While the government has announced increased capital expenditure, it will take time for these investments to translate into a broader private investment cycle.

JPMorgan's chief of emerging market economics, Jahangir Aziz, reportedly pointed out that private investments in India have stagnated, and public spending from government investments has remained at 7% for the past decade. Moreover, foreign direct investments have declined globally, including in India and China.

The leading investment firm also anticipates a decline in India's exports due to the global economic slowdown, as advanced economies move towards a potential recession. It highlights that the impact of monetary policy normalization will be felt in India with a delay, further adding to the cautious outlook.

As per sources, the Indian government may have announced to increase the capex spending, but it might be some time before it will translate into a wider private investment cycle.

Source Credit: https://www.cnbc.com/2023/06/02/jpmorgan-raises-2024-gdp-forecast-for-india-but-says-headwinds-remain.html