India set to become Asia’s fastest growing economy — RT Business News

The world’s sixth largest economy, India, is expected to become Asia’s fastest growing economy in 2022-23, contributing 28% and 22% to regional and global growth respectively, according to economists from Morgan Stanley.

The Wall Street bank predicts that the South Asian nation will create dynamic demand driven by a young workforce and business investment, alongside reforms enacted by the current government. He also expects domestic consumption to pick up and services exports to hold up better than goods exports.

Asia’s third-largest economy managed to grow 9.2% in fiscal 2022, marking a strong recovery from a 6.6% decline the previous year, when it was hit by a series of Covid-related lockdowns. In 2022-2023, the country’s GDP growth is expected to average 7%, according to the bank.

“The recent round of strong data reinforces our confidence that India is well positioned to provide alpha to domestic demand, which will be particularly important as weak growth in developed markets ripples through to global growth. external demand from Asia,” he added. said the bank’s economists, in a note dated Tuesday and seen by Reuters.

Morgan Stanley pointed to the shift in policy focus towards building productive capacity, with a series of reforms helping to unleash powerful momentum in the economy.

“Lower corporate taxes, the Production Linked Incentives (PLI) scheme and India as a potential beneficiary of supply chain diversification will catalyze and support domestic demand, particularly in investment”, adds the bank.

New Delhi cut corporate tax rates to attract manufacturers and boost private investment in 2019, and launched the PLI program the following year to help domestic producers.

“The economy is poised for its best performance in more than a decade as pent-up demand is unleashed,” analysts said, pointing out that “in good health” corporate balance sheets and business confidence bode well for India’s investment outlook.

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