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Moody's upgrades India's economic growth forecast to 6.8% for 2024

04 Mar '24

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Moody's revised India's 2024 economic growth forecast to 6.8 per cent from 6.1 per cent, marking it as the fastest-growing G-20 economy.
The Reserve Bank of India held the policy rate at 6.5 per cent, with headline inflation easing to 5.1 per cent.
Despite lower inflation, no immediate policy easing is expected due to growth and inflation concerns.

India's economic growth is forecast at 6.8 per cent, up from the previously estimated 6.1 per cent, according to Moody’s latest Global Macro Outlook for 2024-25. This adjustment follows a year of stronger-than-anticipated performance, positioning India as the fastest-growing economy among the G-20 nations throughout the forecast period.

The Reserve Bank of India (RBI) maintained its policy rate during its February meeting, with expectations to keep rates steady in the near future, supported by robust growth and sustained inflation levels.

Inflation trends show a slight easing, with headline inflation dropping to 5.1 per cent in January from 5.7 per cent the previous month, and core inflation decreasing to 3.5 per cent from 3.8 per cent in December. Despite this, the RBI has kept the repo rate unchanged at 6.5 per cent, a level sustained since March 2023. Moody's analysts do not foresee a policy easing in the near term due to strong economic growth and inflation rates hovering above the 4 per cent target.

Factors such as rising capacity utilisation, robust credit growth, and positive business sentiment contribute to an optimistic private investment outlook. However, Moody's highlights key risks including persistent inflation, uncertainties around terminal interest rates, and vulnerabilities in the financial sector, which could impact future economic stability.

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