Goldman Sachs – India Outlook, 2024

Goldman Sachs predicts steady economic growth of 6.3% in India in 2024, with the year being divided into two halves. Before the elections, government spending is expected to drive growth, while post-elections, investment growth will likely accelerate, particularly from the private sector. However, the country is expected to face challenges in controlling inflation, with supply shocks causing headline inflation to stay above the target at 5.1%. The government is expected to intervene to keep food inflation under control, but core inflation is only expected to decline slightly to 4.5%. Elevated inflation will restrict the Reserve Bank of India (RBI) from easing monetary policy significantly, and it is forecasted to hold interest rates until Q4 2024 and then cut them by 50 basis points by early 2025. India's current account deficit is expected to increase to 1.9% of GDP in 2024 due to higher oil prices and slower growth in trading partners, although foreign portfolio inflows from India's inclusion in a global bond index will help finance this deficit. The Indian rupee is predicted to remain stable against the USD, supported by the RBI's large FX reserves of nearly $600 billion, and it is anticipated to appreciate slightly to 82.0 in the next 12 months.