August 30, 2024
New Delhi, India
Moody: India’s GDP Growth Forecast
Moody’s Ratings has revised its forecast for India’s GDP growth for 2024 to 7.2%, up from the earlier projection of 6.8%. This upward revision is attributed to stronger private consumption that is boosting aggregate demand in the economy.
According to Moody’s, household consumption is set to grow as headline inflation eases towards the Reserve Bank of India’s (RBI) target. The global rating agency also highlighted emerging signs of a revival in rural demand, spurred by improving agricultural output prospects amid above-normal monsoon rainfall.
Alignment with RBI’s Growth Projections
Moody’s revised growth forecast aligns with the RBI’s projection of 7.2% growth for the Indian economy in 2024-25. The RBI’s optimistic outlook is based on rising rural and urban demand, improved monsoon conditions, and stronger growth in the farm sector, which is expected to boost rural income and consumption.
Additionally, Moody’s cited robust performances in the industrial and services sectors, as indicated by the Purchasing Managers’ Index (PMI), as contributing factors to India’s higher growth momentum.
Growth Projections for 2025
Moody’s has also raised its growth projection for India’s economy in 2025 to 6.6%, up from the earlier estimate of 6.4%. Over the medium and longer term, India’s growth prospects will depend on effectively utilizing its substantial labor pool, which could sustain a growth rate of 6-7% under current conditions.
Global and Domestic Economic Outlook
While India’s economic outlook remains positive, Moody’s noted several global risks. These include ongoing geopolitical conflicts and a deteriorating US economic outlook, which are seen as immediate threats to the global economy. The rating agency expects global growth to slow to 2.7% in 2024 and 2.5% in 2025, down from 3% in 2023.
India’s External Position Strengthens
Moody’s also mentioned that India’s external position has strengthened in recent years, helped by a significant narrowing of its current account deficit. This, along with stabilizing global growth and inflation nearing central bank targets, provides a supportive backdrop for India’s continued economic expansion.
RBI’s Growth Projections
RBI Governor Shaktikanta Das, in his August 8 monetary policy review, projected India’s real GDP growth for 2024-25 at 7.2%, with quarterly growth rates expected at 7.1% for Q1, 7.2% for Q2, 7.3% for Q3, and 7.2% for Q4. For Q1 of 2025-26, the growth rate is projected at 7.2%.
As India’s economy continues to show resilience, the upward revision by Moody’s reflects growing confidence in the country’s economic fundamentals and the potential for sustained growth.
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