According to Morgan Stanley and Nomura in two independent assessments, India is anticipated to replace China as the primary development engine in the Asia region over the medium term, along with Southeast Asian nations like Indonesia.
While Morgan Stanley projected a 6.2% gross domestic product (GDP) growth forecast for India in FY24, Nomura estimated the Indian economy to grow at 5.9% in 2023.
“Even with a slowing China, we expect GDP growth in Asia to sustainably outperform other emerging markets and the US. India and Southeast Asia are set to be the fastest-growing economies this decade. Asia’s flying geese model is once again in action,” Nomura said in a global markets research report.
In its global economics mid-year outlook, Morgan Stanley said: “China’s recovery should support regional strength on a cyclical basis, but medium-term strength comes from India and Indonesia. Other emerging markets are forecast to remain subdued, though we see growth improving in most economies in 2024 as real rates edge down and domestic demand recovers.”
According to Morgan Stanley, a combination of structural and cyclical factors, including better macroeconomic stability, healthier balance sheets, and increased consumption and capital accumulation, are fuelling India’s resurgence.
According to Morgan Stanley report, the high-frequency data indicates a broad-based rebound with real credit growth at 12.6%, real GST revenues up 8.8%, services PMI at a 13-year high, and services exports tracking at an all-time high.
