Page 4 - Policy Economic Report - October 2024

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Executive Summary

According to IMF, the global economy has remained resilient throughout the disinflationary process,
avoiding a global recession. Growth is projected to hold steady at 3.2 percent in 2024 and 2025, even
though low-income developing countries have seen sizable downside growth revisions, as a result of
increased regional conflicts.

Global growth is expected to remain broadly flat— decelerating from 3.3 percent in 2023 to 3.1 percent
by 2029, growth in advanced economies markedly slowed in 2023 and is projected to remain steady,
oscillating between 1.7 and 1.8 percent until 2029. In the United States, projected growth for 2024 has
been revised upward to 2.8 percent, on account of stronger outturns in consumption and nonresidential
investment. In the euro area, GDP growth is expected to pick up to a modest 0.8 percent in 2024 as a
result of better export performance of goods. In 2025, growth is projected to rise further to 1.2 percent,
helped by stronger domestic demand.

Emerging Asia’s strong growth is expected to subside, from 5.7 percent in 2023 to 5.0 percent in 2025. In
India, the outlook is for GDP growth to moderate from 8.2 percent in 2023 to 7 percent in 2024 and 6.5
percent in 2025, because pent-up demand accumulated during the pandemic has been exhausted, as the
economy reconnects with its potential.

In case of India, according to RBI, real GDP growth is expected at 7.2 per cent in 2024-25 with 7.0 per cent
in Q2; 7.4 per cent both in Q3 and Q4. For 2025-26, assuming a normal monsoon and no major exogenous
or policy shocks, real GDP growth is estimated at 7.1 per cent, with Q1 at 7.3 per cent, Q2 at 7.2 per cent,
Q3 and Q4 both at 7.0 per cent.

The growth is attributed to robust government capex and revival in private investment; improved
prospects of agricultural sector due to favorable monsoon rainfall; strengthening manufacturing and
services sector activity sustained by strong domestic demand; retreating global and domestic inflation.

However, despite the above growth momentum, challenges stand in terms of escalation in geopolitical
tensions; volatility in international financial markets and geoeconomic fragmentation; deceleration in
global demand; along with supply chain disruptions.

Headline consumer price index (CPI) inflation moderated to 4.4 per cent in April-August 2024 from 5.2 per
cent in H2:2023-24. Food price inflation, on the other hand, remained elevated, averaging 6.9 per cent
over the last five months (April-August 2024) and contributing 72.5 per cent of headline inflation during
the period. With domestic economic activity strengthening, and pick-up in southwest monsoon rainfall,
the Monetary Policy Committee decided to keep the policy repo rate unchanged at 6.5 per cent while
retaining the stance of withdrawal of accommodation. Further, year-on-year inflation rate based on All
India Consumer Price Index (CPI) for the month of September, 2024 is 5.49%. Corresponding inflation rates
for rural and urban are 5.87% and 5.05%, respectively.

The headline HSBC Flash India Composite Output Index – a seasonally adjusted index that measures the
month on-month change in the combined output of India's manufacturing and service sectors – rose to
58.6 this month from September's final reading of 58.3, which was a 10-month low.

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