Acuité Ratings & Research Limited’s Post

Transcript

Hello viewers. Let me first wish you and your families a very wonderful year ahead in 2025 with good health and happiness. 2024 was clearly positive from a political stability perspective, with the ruling party and its allies getting reelected in June and also returning control over most of the states which went for polls in the ear. By 2024 fell short of expectations on the economic growth front. Real GDP growth slowed down to 6.6% in the June 24th quarter and then unexpectedly further down to 5.4% in the September 24th quarter. This made us revise our FY25 GDP growth forecast to 6.4% from the original 7%. Some of the factors. Behind the slowdown, where the impact of excess rings in certain parts of the country and in material delay in government capital expenditure, partly a fallout of the elections. Higher interest rates and the regulatory tightening in retail loans did also have some impact on urban consumer demand. The rural engine of the economy, though, has been a better performer and with the robust caricaturist and a solid Ravi sowing, the agriculture sector is poised for 3% plus growth in FY25. Inflation continues to be a difficult animal for policymakers to control. While the headline CPI inflation dropped below 4% in July, August 24, it saw a resurgence due to excess trains and higher vegetable prices. But the good news is that vegetable prices are finally on the decline and this should help in headline inflation coming closer to 4.5%. Over the next few months. With the growth slowdown and the expected moderation in inflation, there is a high likelihood of the much awaited rate cut by RBI in February 2025. Nevertheless, it's not an easy decision for the Monetary Policy Committee given the severe headwinds on the external front, a resilient U.S. economy, a stronger U.S. dollar and expectation of aggressive tactic policies from the upcoming new. You, US administration, all this can lead and is leading to significant capital outflows from India and a pressure on the rupee which has already breached the 86 level. Well are they will continue to support the Ruby. The risks of a material depreciation in 2025 remain. Despite the disappointments, the funding environment in the domestic capital market continues to be favorable with main board Itos at one point 6,00,000 crore in 2024 calendar and a large pipeline for 25, they should spur a steady pickup in investments where the private sector. In the next year, we estimate GDP growth to recover to around 6.8%. In the second-half of FY25, primarily driven by higher agricultural growth and a revival in public capital expenditure, in our opinion, economic reforms will be necessary to enhance the employment levels and domestic demand and these are key to 7% plus growth over the medium to long term. We look forward therefore to some of these reform measures in the upcoming. Union Budget. Thank you and all the best again in 2025.