Key Points
UBS highlights concerns such as K-shaped consumption patterns, shifting household savings, and fiscal profligacy in states..
While Indias GDP growth is expected to stabilize at 6.8 per cent in FY25, risks remain skewed to the downside, particularly with global economic uncertainties and Chinas excess capacity potentially impacting the domestic market..
However, we think India is not immune to external risks including a global growth slowdown and China's excess capacity being offloaded on the domestic market," UBS said.. Shifting household savings. The report also highlights a significant shift in household savings patterns..
"While UBS's India Bank team expects bank credit growth to soften to 12-13% YoY by end-March 2025E, we think bank deposit rates could stay elevated despite expected policy easing, leading to asymmetric monetary transmission."..
UBS now forecasts that the RBI could lower repo rates by 75 basis points in this cycle, with rate cuts possibly starting as early as December 2024.. " That said, the timing of India's rate cut cycle will be dependent on domestic growth-inflation dynamics..
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