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March 4, 2024

Moody’s Raises India’s 2024 Growth Forecast to 6.8% Amid Strong Economic Performance

Global rating agency Moody’s has upgraded India’s growth forecast for the year 2024, citing stronger-than-expected economic data and diminishing global economic challenges. The forecast now stands at 6.8%, up from the earlier estimate of 6.1%, reflecting India’s robust economic performance in 2023.

According to Moody’s Global Macroeconomic Outlook for 2024, India’s real GDP witnessed a significant expansion of 8.4% year-over-year in the fourth quarter of 2023, resulting in a full-year growth of 7.7%. This growth has been fueled by increased capital spending by the government and a surge in manufacturing activity.

The agency anticipates that India’s economy will continue to grow at a steady pace of 6-7% in real GDP, buoyed by the fading global economic headwinds. Moody’s highlights India’s position as the fastest-growing economy among G-20 nations over the forecast period.

Looking ahead to 2025, Moody’s projects a GDP growth rate of 6.4%, indicating sustained economic momentum in the coming years. High-frequency indicators, such as robust goods and services tax collections, rising auto sales, and strong credit growth, underscore the resilience of India’s urban consumption demand.

Furthermore, Moody’s emphasizes the importance of policy continuity and infrastructure development post-election, expecting the government to maintain its focus on capital expenditure and investment in key sectors.

While private industrial capital spending has been relatively slow, Moody’s anticipates a pickup in investment activity, driven by supply chain diversification efforts and the government’s Production Linked Incentive scheme to bolster targeted manufacturing industries.

The year 2024 marks an election year for several G-20 countries, including India, with implications that extend beyond domestic borders. Moody’s emphasizes the significance of political leadership in shaping economic and public policy, with businesses adapting to evolving geopolitical dynamics by restructuring supply chains and capital sources.

Geopolitical realities are expected to influence international trade, capital flows, and migration trends, with domestic industrial and trade policies increasingly intertwined with foreign policy considerations.

In light of these developments, Moody’s underscores the need for proactive policymaking and strategic planning to navigate the evolving global landscape effectively. Despite uncertainties surrounding elections and geopolitical tensions, India’s strong economic fundamentals position it favorably for sustained growth in the years to come.

Rajan Shukla

Rajan Shukla

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