India's economic outlook appears increasingly promising, according to Chetan Ahya, Chief Economist at Morgan Stanley. Speaking on CNBC-TV18, Ahya highlighted a key development in the global financial landscape: the peaking of the US 10-year bond yield, which is expected to positively impact India.

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He anticipates a decline in the US 10-year bond yield to 4.2% by the second quarter of 2025 and at 3.95% by the end of next year.

Ahya remains optimistic about India's growth trajectory, projecting a robust 6.4% growth next year. This forecast positions India as a major contributor to global growth, accounting for an impressive 17% in the financial year 2024. Such a significant contribution underscores India's growing influence on the world stage.

“India will still continue to be the best domestic demand alpha opportunity within the region and we are expecting growth to be at 6.4% next year, in the 2024 calendar year,” he said.

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The export sector in India is also expected to see a modestly positive trend moving forward. However, Ahya pointed out that the real driving force behind India's growth story is its strong domestic demand, which is likely to continue fueling the economy.

“India's story has been driven by more domestic demand and that story still continues and there is nothing that should hold back India’s growth rate,” he said.

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Ahya observed stability in China's energy demand, a factor that plays a crucial role in the global economic environment. He also highlighted the improvement in corporate profitability in India, which has been instrumental in reviving the country's investment-to-GDP ratio.

For more, watch the accompanying video

(Edited by : Shweta Mungre)