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India Economics

Our India coverage provides detailed analysis, independent forecasts, and economic outlooks for India’s economy and financial markets. We offer rapid responses to new data and developments, along with in-depth coverage of key themes, current trends, and future economic dynamics.

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Our View

A tougher year ahead

After a stellar run, India’s economy has entered a softer patch that will continue for a few more quarters. We think that will portend an underperformance in local equities relative to other major benchmarks. Headline CPI inflation is likely to have peaked and, under new leadership, we think the RBI’s MPC will turn less hawkish and begin cutting interest rates in its next meeting in February. We forecast 100bps of cuts to the repo rate (to 5.50%) in the upcoming cycle, a more dovish view than that of the consensus. 

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Main Economic & Market Forecasts

% y/y unless stated

Latest

Q3 2024

Q4 2024

Q1 2025

2024

2025

2026

GDP

5.4

+5.4

+5.3

+5.3

+6.3

+6.0

+6.5

Consumer Prices

+5.5**

+4.3

+5.7

+5.1

+5.0

+4.5

+4.7

Current Account (4Q Sum, % of GDP)

 -0.7*

-0.8

-0.8

-1.2

-0.8

-1.2

-1.2

Repo Rate %

6.50

6.50

6.50

6.25

6.50

5.50

5.50

Standing Deposit Facility %

6.25

6.25

6.25

6.00

6.25

5.25

5.25

Cash Reserve Ratio %

4.50

4.50

4.00

4.00

4.00

4.00

4.00

10-Yr Government Bond Yield %

6.74

6.75

6.75

6.75

6.75

6.75

7.00

INR/US$

84.8

83.8

85.0

85.5

85.0

87.0

87.0

Sensex

81,290

84,300

76,500

75,875

76,500

74,000

71,500

Sources: Bloomberg, CEIC, Capital Economics; *Q2 2024; **November; End of period.