Virendra Pandit
New Delhi: The Indian economy, which is seen as growing at 6.5 percent this year, is all set to contribute 16 percent of global GDP over 2023-24, according to Morgan Stanley.
In a report, the US-based investment banking company said the Indian economy has become a key contributor to Asian economic growth. Its broad-based post-pandemic recovery in demand runs contrary to the weakness in demand seen outside Asia.
India is benefitting from a combination of cyclical and structural tailwinds and is expected to contribute 16 percent of the global gross domestic product (GDP) over 2023-24.
“In recent months, a wide variety of indicators suggest that India’s recovery is strong and broad-based, and is well-placed to sustain growth rates of above 6 percent,” the report said.
The Purchasing Manager’s Index (PMI) is at a 13-year high and manufacturing PMI is near an 11-year high, both well above that of other economies; passenger vehicle sales are at 131 percent of pre-Covid levels, real goods and services tax (GST) collections are 35 percent higher than pre-pandemic years, and services exports have risen by 84 percent since October 2020, the media reported on Tuesday.
A strong domestic demand and services export will offset the downside in goods export. India’s domestic demand is supported by healthy balance sheets.
“Meanwhile, the key macroeconomic stability indicators of inflation and current account deficit have moved back into policymakers’ comfort zones and we expect it will remain there for some time. This suggests that policymakers will not have to bring monetary policy into restrictive territory, allowing economic expansion further room to run,” Morgan Stanley said.
“India’s strong growth outlook stands out as the best among large economies and we forecast it will contribute 16 percent to global GDP growth over 2023-24.”