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Published: June 14, 2024
Updated: June 14, 2024

India Set to Lead Asia-Pacific Growth in 2024, Says Moody’s

Robust Domestic Demand Fuels Growth

India is poised to maintain its status as the fastest-growing economy in the Asia-Pacific region for the second half of 2024, according to a recent report by Moody's Ratings. The credit rating agency attributes this growth to strong domestic demand and anticipates that India's economy will continue to build on the momentum gained last year.

Policy Continuity and Infrastructure Focus

Moody’s report highlights that the upcoming general elections are expected to result in policy continuity, which will further bolster economic growth. The ongoing focus on infrastructure development and the encouragement of private sector investment are seen as critical factors driving this sustained growth.

Regional Growth Outperformers

The report also identifies India, Indonesia, and the Philippines as the standout performers in the Asia-Pacific region during the first half of 2024. These countries have exceeded pre-COVID growth levels, driven by rising exports, strong local demand, and increased government spending on infrastructure projects.

Positive Outlook for Indian Banking System

Moody’s notes that the Indian banking system has a positive outlook, supported by solid economic growth and healthy corporate credit quality. This favorable environment is expected to contribute to the stability and resilience of India’s financial sector.

Uneven Monetary Policy Normalization

Regarding monetary policy, the report suggests that the normalization process will be uneven across the Asia-Pacific region. Central banks are unlikely to reduce rates before the US Federal Reserve does, with potential cuts expected in late 2024 or early 2025. However, volatile commodity prices pose a risk to this timeline, particularly for countries that are net importers of food and oil.

Global Economic Forecasts

Earlier this week, the World Bank retained its growth forecast for India at 6.6% for FY25. The World Bank also reaffirmed that India is set to remain the fastest-growing economy among the world's largest economies, although the pace of expansion is anticipated to moderate.

India's economic outlook for 2024 remains strong, with domestic demand, infrastructure development, and private sector investment driving growth. Despite potential challenges from global commodity price volatility and uneven monetary policy normalization, India is well-positioned to lead the Asia-Pacific region in economic growth.