Moody’s raises India’s 2024 GDP growth forecast to 7.2%

Moody’s upgrades India’s GDP growth forecast

Moody’s Ratings, based in New York, has upgraded its forecast for India’s GDP growth in 2024 to 7.2% from its previous estimate of 6.8%. This revision reflects stronger private consumption, which is driving increased aggregate demand in the economy.

In its latest report, Moody’s highlighted that easing headline inflation is expected to boost household consumption. The agency also noted emerging signs of revived rural demand, supported by favorable agricultural conditions due to above-normal monsoon rainfall.

The forecast adjustment aligns with the Reserve Bank of India’s (RBI) projection of 7.2% growth for 2024-25. Moody’s acknowledged the potential for further upward revisions if private consumption trends continue to gain momentum.

Moody’s also cited strong performances in the industrial and services sector, indicated by the Purchasing Managers’ Index, as an indicator of higher growth momentum.

The Indian economy is expected to grow faster at 6.6 percent in 2025 as well, compared to the 6.4 percent growth projected earlier, Moody’s said.

“Over the medium and longer term, India’s growth prospects depend on how well the country can productively tap its substantial pool of labour. It should be possible for the economy to post 6-7 percent growth, sheerly on the basis of the present conditions,” Moody’s stated.

“India’s external position has also strengthened in recent years amid a marked narrowing of its current account deficit,” the rating agency said.

“Global growth is stabilizing and inflation in most markets is close to the central bank targets. We expect global growth will slow to 2.7 percent and 2.5 percent in 2024 and 2025, respectively, from 3 percent in 2023, though growth trends differ across countries,” Moody’s said.

The rating agency also predicted countries to move from cyclical recovery to expansionary phase.

Apart from ongoing geopolitical conflicts, the report viewed the deteriorating US economic outlook as the most immediate risk to the global economy going ahead.

RBI Governor Shaktikanta Das, on August 8, projected India’s real GDP growth for 2024-25 at 7.2%, with quarterly estimates of 7.1% in Q1, 7.2% in Q2, 7.3% in Q3, and 7.2% in Q4. The forecast for Q1 2025-26 is also 7.2%. The RBI attributed the optimistic outlook to improved monsoon conditions and expected growth in the agricultural sector, which will boost rural incomes and overall growth.

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