• January 12, 2024

CFONEXT100 2023: Key highlights from 2024 Economic Forecast by Economist Aditi Nayar

CFONEXT100 2023: Key highlights from 2024 Economic Forecast by Economist Aditi Nayar

Speaking on India’s economic landscape and the outlook for 2024 at the 12th CFONEXT100 event, Aditi Nayar, Chief Economist at ICRA, noted that the country’s GDP data for Q2 FY2024 came in at a higher than expected 7.6%, surpassing global counterparts.

Addressing a captivated audience at the 12th CFONEXT100 event, Aditi Nayar, Chief Economist at ICRA, provided a comprehensive analysis of India’s economic trajectory and shed light on the nation’s economic dynamics as it traverses the intricate landscape of 2024.

Here are some key highlights from from Ms Nayar’s address:

Ms Nayar commenced the discourse on a positive note, noting that the country’s GDP data for Q2 FY2024 came in at a higher than expected 7.6%, surpassing global counterparts. However, she added that the buoyancy in the industrial sector wasn’t mirrored in agriculture, grappling with an erratic monsoon and reduced reservoir levels, hinting at a potential decline in rural demand.

Watch the full session here:

The economist then delved into a nuanced analysis of high-frequency indicators, urging caution in interpreting data due to October’s Diwali-related disruptions and subsequent contractions in November. Ms Nayar articulated the disparities in the urban demand recovery, showcasing varying trends among income groups and sectors. While lifestyle services thrived, other segments experienced diverse demand patterns.

Optimistic about India’s investment cycle, Ms Nayar predicted a measured and sustainable expansion. She spotlighted promising signs of capacity utilization, nearing the threshold of emboldening private sector investments. Despite encouraging indicators, Ms Nayar underscored the need for realism, envisioning a private capital cycle characterized by measured and realistic growth.

A detailed examination of government capex and export trends underscored the potential challenges India may face in the latter half of the fiscal year, she noted. Government capex, a catalyst for growth, showed early vigor but is anticipated to slow down due to state elections and the looming Model Code of Conduct. Exports, grappling with geopolitical uncertainties and weaker commodity prices, may confront headwinds in the coming months.

The economist then turned her attention to commodity prices, forecasting a gradual decline in the tailwinds that buoyed the corporate sector’s value-added growth. The decline in commodity prices could impact margins and reshape the corporate landscape in the subsequent quarters.

Ms Nayar concluded her near-term projections with a tempered forecast, anticipating a slowdown in India’s GDP growth in the later half of 2024. Looking ahead, she envisioned a realistic growth trajectory of 6.2% to 6.5% in FY 2025, characterized by a private capital cycle with measured and sustainable expansions.

In wrapping up her address, Ms Nayar underscored the need for cautious optimism in navigating India’s economic landscape. Medium-term trends, including potential GDP growth, inflation, fiscal consolidation challenges, and the trajectory of the private capital cycle, were all outlined as essential considerations for stakeholders, she added. 

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