Moody’s Upgrades India’s Economic Outlook: 2024 GDP Growth Raised to 6.8%, Anticipates Continued Strong Performance
Key Highlights
GDP Growth Upgrade: Moody’s raises India’s 2024 GDP estimate to 6.8% from the earlier 6.1%.
Fastest Growing G20 Economy: India expected to maintain its position as the fastest-growing economy among G20 nations.
Stable Monetary Policy: RBI likely to maintain the policy rate in the coming months, supported by strong growth and firm inflation.
Future Growth Projection: Projected GDP growth for 2025 is at 6.4%.
Post-Election Expectations: Anticipation of policy continuity and infrastructure development push after general elections.
Moody’s, a renowned financial ratings agency, has revised its outlook for India’s economic performance in 2024, increasing the projected GDP growth rate from 6.1% to 6.8%. This adjustment indicates a more optimistic view of India’s economic prospects for the year. Furthermore, Moody’s expects India to maintain its status as the fastest-growing economy among the G20 nations, highlighting the country’s potential for robust expansion despite global economic challenges.
In terms of monetary policy, Moody’s suggests that the Reserve Bank of India (RBI) is likely to maintain the current policy rate in the coming months. This decision is based on the assessment of strong economic growth and stable inflation levels, which provide a favorable environment for policy continuity.
Looking ahead to 2025, Moody’s forecasts a GDP growth rate of 6.4% for India, indicating sustained economic momentum. Additionally, the agency anticipates a focus on policy continuity and infrastructure development following the general elections, emphasizing the importance of ongoing government initiatives to support long-term economic growth and development.
In the final quarter of 2023, India experienced a significant economic surge, achieving a growth rate of 8.4%, marking its most rapid expansion in the past 18 months. This robust growth was primarily fueled by the strong performance of the manufacturing and construction sectors, surpassing economists’ predictions of 6.6%. The noteworthy acceleration reflects the resilience and dynamism of key sectors contributing to the country’s economic landscape.
Despite this positive economic momentum, concerns persist on the inflation front. In January, headline inflation moderated slightly to 5.1% from the preceding month’s 5.7%, though it remains above the central bank’s targeted 4%. Moody’s analysis suggests that due to these solid growth dynamics and prevailing inflation levels, any immediate policy easing is unlikely. The economic landscape seems to demand a cautious approach, balancing the need for continued growth with the imperative of managing inflationary pressures.
Overall, Moody’s revised outlook reflects confidence in India’s economic resilience and potential for continued expansion, driven by favorable domestic conditions and policy measures aimed at promoting sustainable growth.
