Maxro prospects

“We expect moderate growth, stable but relatively elevated inflation, steady interest rates and a volatile India rupee to mark India’s macro profile,” as per the report

India’s macro prospects are likely to be punctuated by a global demand slowdown along with the overhang of geopolitics, said Kotak Mahindra Bank on Thursday in a report.

In the India Outlook CY2023-24 report, the bank stated that while the domestic economy follows a middling path, risks of negative surprises will persist. 

“We expect moderate growth, stable but relatively elevated inflation, steady interest rates and a volatile India rupee to mark India’s macro profile,” the report mentioned.

India’s growth will likely remain relatively resilient while decelerating to around 6 per cent in FY2024E after 6.8 per cent in FY2023E. Headwinds to growth will stem from global demand slowdown and the lagged impact of policy rate hikes. 

Manufacturing sector momentum will likely remain muted while contact-based services revert to pre-Covid-19 levels. 

The RBI will be cautious about the inflation outlook as it hovers around the 5 to 5.5 per cent handle and average at 5.3 per cent in FY2024E after 6.6 per cent in FY2023E. 

“Overall, the growth-inflation mix is likely to be in a no-man’s land, inspiring neither much enthusiasm nor much despair while adverse risks remain,” it added.

Talking about the global economy, the report stated that it is going to be marked by slow growth, moderating but elevated inflation, peaking policy rates with some late moderation, and continuing geopolitical risks. 

Unlike the past 10-15 years, advanced economies (AE’s) central banks will be reluctant supporters of growth in CY2023, as inflation remains elevated compared to their targets. 

This makes the extent of recession/slowdown in the developed economies uncertain. 

“There could be some support from China after the zero-Covid policy relaxation, although multiple headwinds keep prospects muted,” it added.