Moody’s Revises India’s Growth Forecast For 2024 To 6.8 Per Cent On Strong Economic Data

The global ratings agency attributed this change in the projection to the ‘stronger-than-expected’ economic data in 2023 and receding global economic headwinds

Moody’s issued a revised growth forecast for India for the 2024 calendar year by raising its estimates from 6.1 per cent to 6.8 per cent for the economy on Monday. The global ratings agency attributed this change in the projection to the ‘stronger-than-expected’ economic data in 2023 and receding global economic headwinds.

Recently, India reported a GDP of 8.4 per cent in the October-December quarter in the preceding calendar year, resulting in a growth of 7.7 per cent for the whole of 2023. Moody’s Investors Service noted that capital expenditure by the government and a robust manufacturing sector helped contribute to strong growth in 2023, reported PTI.

The rating agency in its Global Macroeconomic Outlook for 2024 noted, “With global headwinds fading, the Indian economy should be able to comfortably register 6-7 per cent real GDP growth. India's economy has performed well and stronger-than-expected data in 2023 has caused us to raise our 2024 growth estimate to 6.8 per cent from 6.1 per cent. India is likely to remain the fastest growing among G-20 economies over our forecast horizon.”

The agency projected the GDP growth for the Indian economy at 6.4 per cent in 2025. Explaining the growth seen in 2023, the agency said that the economy maintained its robust pace from the September and December quarters to the March quarter in 2024. “Robust goods and services tax collections, rising auto sales, consumer optimism, and double-digit credit growth suggest urban consumption demand remains resilient. On the supply side, expanding manufacturing and services PMIs add to evidence of solid economic momentum,” the agency said in its report.

Taking note of the elections in the year, Moody’s said that it expects the government to keep focusing on infrastructure development and maintain consistency in policy after the general elections conclude. The agency further noted that private industrial capex remained low, however, it could gain pace with the ‘ongoing supply chain diversification benefits and investors' response to the government's Production Linked Incentive scheme to boost key targeted manufacturing industries’.

On the political front, the agency stated, that 2024 remained an election year for multiple G-20 countries, with India, Indonesia, South Africa, the UK, the US, and Mexico, all scheduled for elections in the year. 

“Implications of elections can go beyond borders and economic and public policy in today's increasingly fractious world, it said. Leaders elected this year will influence domestic and foreign policies for the next four to five years. Businesses are accordingly responding to evolving geopolitical dynamics by reorganizing supply chains and capital sources. Geopolitical realities will be influencing international trade flows, capital flows, international migration trends, and international organizations in the years to come. Domestically, industrial and trade policies of several countries are intertwined with foreign policy,” the agency explained.