India's Economic Growth Outlook: Franklin Templeton Predicts Over 7% Growth Despite Challenges
India's Economic Growth Outlook
Franklin Templeton Predicts Over 7% Growth
Despite recent challenges and a lower-than-expected growth of 5.4% in the second quarter of 2025, Franklin Templeton's annual outlook for India predicts an average growth of over 7% in the subsequent four quarters. This growth is supported by strong domestic demand and prudent government policies.
Signs of Recovery
High-frequency indicators suggest that the domestic slowdown has bottomed out, with recovery signs driven by festive demand and rural activities. Industrial activities are expected to normalize, and the services sector will continue to expand, as indicated by the HSBC PMI data for services, which expanded to 58.4 in November.
Inflation Trends
Over the past year, domestic headline inflation has mostly stayed within the RBI's tolerance band, with fluctuations driven by changes in food and vegetable prices. Core inflation has moderated, hitting its lowest levels in over four years, aided by cuts in petrol and diesel prices. However, recent mobile tariff hikes have added some upward pressure.
Global Inflation Context
Globally, headline inflation has moderated in most countries through 2024, with significant drops in Brazil and India. However, core inflation remains higher than desired in many countries, indicating persistent price pressures.
Doubts Revealed
Franklin Templeton
Franklin Templeton is a global investment management company that helps people and organizations manage their money by investing in different financial assets like stocks and bonds.
7% Growth
7% growth means that the economy is expected to become 7% larger than it was before. This is a measure of how much more goods and services the country is producing.
Q2FY25
Q2FY25 refers to the second quarter of the financial year 2025. In India, the financial year starts in April and ends in March, so Q2FY25 would be from July to September 2024.
Festive Demand
Festive demand refers to the increase in buying and selling of goods and services during festival seasons, like Diwali, when people tend to spend more on gifts, clothes, and celebrations.
RBI
RBI stands for the Reserve Bank of India, which is the central bank of the country. It manages the money supply and interest rates to keep the economy stable.
Core Inflation
Core inflation is a measure of the increase in prices of goods and services, excluding food and energy prices, which can be very volatile. It gives a clearer picture of long-term inflation trends.
Mobile Tariff Hikes
Mobile tariff hikes mean that the cost of using mobile phone services, like calling and internet, has increased. This can affect how much people spend on these services.
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