Moody’s Upgrades India’s GDP Growth Forecast to 7.2% for 2024, Citing Robust Economic Performance

Moody’s has revised its economic growth forecast for India, increasing it to 7.2% for 2024 and 6.6% for 2025, up from its previous estimates of 6.8% and 6.4%, respectively. The New York-based rating agency attributes this upward revision to strong, broad-based growth driven by resilient private consumption and robust industrial and services sectors. 

In its latest report, “Global Macro Outlook 2024-25 (August 2024 Update),” Moody’s highlights that India’s economy expanded by 7.8% year-over-year in the first quarter of 2024, despite a tight monetary policy and ongoing fiscal consolidation efforts. The services sector, in particular, has shown remarkable strength, with the Services PMI consistently above 60 since the beginning of the year. 

Household consumption is expected to grow further as headline inflation eases towards the Reserve Bank of India’s (RBI) target, bolstered by improved rural demand and favorable monsoon conditions. The Indian economy’s resilience is further supported by strong domestic demand, increased investment, and robust services activity. 

Moody’s notes that India’s GDP grew by 8.2% in FY24, surpassing the 7% growth recorded in FY23. The International Monetary Fund (IMF) and the World Bank have also upgraded their growth forecasts for India, citing strong economic momentum. 

Inflation has moderated, with retail inflation based on the Consumer Price Index (CPI) falling to 3.54% in July, the lowest in 59 months. The RBI has maintained its benchmark repo rate at 6.5% since February 2023, with expectations for real GDP growth at 7.2% in FY25. 

Moody’s concludes that India is well-positioned to sustain annual growth rates of 6%-7%, given its young and growing labor force, though the extent of this success will depend on effective employment generation and skill development policies. 

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