India’s GDP growth rate is anticipated to ascend to 7 per cent by 2026, outpacing China’s projected growth of 4.6 per cent, according to a report from S&P Global Ratings titled ‘China Slows India Grows.
‘The report foresees a shift in the growth engine of the Asia-Pacific region from China to South and Southeast Asia.
S&P’s projections indicate a deceleration in China’s GDP growth to 4.6 per cent in 2024 (compared to 5.4 per cent in 2023), a slight uptick to 4.8 per cent in 2025, and a return to 4.6 per cent in 2026. In contrast, India is expected to achieve a growth rate of 7.0 per cent in 2026, with Vietnam at 6.8 per cent (up from 4.9 per cent), the Philippines at 6.4 per cent (compared to 5.4 per cent), and Indonesia maintaining a steady 5 per cent.
The US-based rating agency has projected India’s GDP to expand at 6.4 per cent in the current fiscal year and the next. Further, it envisions a growth rate increase to 6.9 per cent in 2025, followed by 7 per cent in 2026.
S&P said that central banks in the Asia-Pacific region are likely to maintain high-interest rates, leading to costlier debt servicing for borrowers in the region.
The report also highlights potential challenges, such as a widening conflict in the Middle East affecting global supply chains and raising energy costs, thereby contributing to inflation. It emphasises the vulnerability of Asia-Pacific’s growth to energy shocks from a possible escalation of the Middle East conflict and a slowdown in global demand, particularly the risk of a U.S. hard landing.
S&P has adjusted its projection for the region’s growth (excluding China) in 2024 from 4.4 per cent to 4.2 per cent. Additionally, the report acknowledges varying prospects for industries, with export-centric manufacturing expected to face more significant challenges.
