The Reserve Bank of India (RBI) has forecasted a robust 7.2% growth in the country’s real GDP for the fiscal year 2024-25, supported by a rise in both urban and rural demand. RBI Governor Shaktikanta Das announced this projection on Thursday, attributing the optimistic outlook to continued investment demand and rising consumption across sectors.

The RBI’s forecast breaks down the expected GDP growth as follows: 7.1% for Q1, 7.2% for Q2, 7.3% for Q3, and 7.2% for Q4. The growth estimate for Q1 of 2025-26 is also projected at 7.2%.

Das highlighted that the cumulative southwest monsoon rainfall, which is 7% above the long-term average as of August 7, 2024, has been favorable for kharif sowing. This has led to a 2.9% increase in the area sown compared to the previous year. Industrial output saw a year-on-year growth of 5.9% in May 2024, although core industries’ growth slowed to 4.0% in June from 6.4% in May.

Recent high-frequency indicators show an expansion in service sector activities, a revival in private consumption, and increased private investment. Merchandise exports, non-oil non-gold imports, and services trade also reported growth during April-June 2024.

Looking ahead, the Indian Meteorological Department’s (IMD) forecast of an above-normal southwest monsoon and strong kharif sowing are expected to bolster rural demand. Additionally, sustained growth in manufacturing and services indicates steady urban demand.

Das noted that high investment activity, evidenced by increased steel consumption, high capacity utilization, and healthy balance sheets of banks and corporations, along with government infrastructure spending, supports the positive economic outlook. However, he cautioned about potential risks from geopolitical tensions, volatile international commodity prices, and economic fragmentation.

Globally, inflation is easing in major economies, though services price inflation remains persistent. Recent international trends include a weakened dollar index, eased sovereign bond yields, and record-high gold prices, amid ongoing financial market volatility.