News

Published: September 20, 2024
Updated: September 20, 2024

Moody’s Upgrades India’s 2024 Growth Forecast to 7.1% Amid Positive Regional Trends

Moody’s has revised India’s growth projection for 2024 to 7.1%, an increase from its previous estimate of 6.8% in June. This upward revision is based on stronger-than-expected economic activity in the Asia-Pacific region, which is forecast to outpace global growth.

Consistent 2025 Outlook

While the 2024 outlook was revised, Moody’s has maintained its growth forecast for India in 2025 at 6.5%. The credit rating agency had also upgraded India’s GDP growth projection to 7.2% for 2024 and 6.6% for 2025 last month, aligning with its current outlook.

Strong Economic Foundations

India's robust economic performance has been fueled by a combination of strong domestic demand, increased investments, and rapid growth in the services sector. This momentum is expected to drive the Indian economy forward, despite some challenges in the near term.

Government and Global Institutions Align

In line with Moody’s projections, the World Bank also revised its growth forecast for India in fiscal year 2025 (FY25) to 7%, citing factors such as increased government spending on infrastructure, strong real estate investments, and favorable agricultural conditions due to a positive monsoon season. Similarly, the International Monetary Fund (IMF) had previously upgraded India's growth forecast for FY25 to 7%.

Temporary Slowdown in Early FY25

India’s growth rate for the April-June quarter of FY25 was reported at 6.7%, slowing from 7.8% in the preceding quarter (Q4 FY24). This marked the slowest growth in five quarters, with the deceleration attributed to factors such as muted government capital expenditure, general election-related uncertainties, and uneven monsoon conditions. However, experts view this slowdown as temporary, with growth expected to pick up in the coming quarters.

Asia-Pacific Growth Outlook

In the broader Asia-Pacific region, Moody’s forecasts growth of 3.9% in 2024 and 4% in 2025, outpacing the global economy. While exports, particularly in key sectors like semiconductors, have softened, domestic demand is expected to fuel growth across the region. Falling inflation and stronger currencies are likely to lead to rate cuts, providing a potential boost to regional economies.

India’s growth outlook remains positive, with Moody’s and other global institutions projecting strong performance through 2024 and 2025. While temporary challenges may slow growth in the short term, the Indian economy is poised for continued expansion, supported by solid domestic demand and strategic investments.