Updated Mar 11, 2025 13:29 IST
Morgan Stanley says Indian market best positioned in Asia amid global trade shocks; what’s driving this optimism?
Trade tensions will likely remain a drag on Asia’s growth, but India is still the best placed in the region against this backdrop – low goods exports, strong services exports and policy support for domestic demand, a Morgan Stanley report said on Tuesday.
“We believe that reversing the unwarranted double tightening of fiscal and monetary policies will help drive the recovery,” it said.
Monetary easing is now in full force across three fronts- rate cuts, liquidity and regulatory easing.
A recovery in domestic demand is taking shape, driving growth momentum and helping India reclaim its leadership in the region’s economic growth.
It added that India continues to gain market share in services exports, rising from 3.9 per cent in 2020 to 4.4 per cent in 2024
Key Drivers Of Recovery
According to Morgan Stanley, sustained momentum in government capital expenditure (capex) spending is seen along with moderation in food inflation boosting real household incomes and improvement in services exports
Broad-Based Consumption Recovery
– Private consumption showed signs of recovery in Q4 2024, with real private consumption growth accelerating to 6.9 per cent YoY
– FMCG volume growth picked up to 7.1 per cent YoY (vs. an average of 3.5 per cent YoY in Q2-Q3 2024), driven by a stronger rural recovery
Capex Outlook
-Government expenditure growth has stablised at 9 per cent YoY in Q4 2024
-In the FY26 budget, policymakers have projected 10.1 per cent growth in central government capex
-However, the recovery in private capex is expected to remain slow.
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