Moody's upgrades India's economic growth forecast to 7.1% in 2024

Moody's Analytics has upgraded India's gross domestic product (GDP) forecast for calendar year 2024 to 7.1%, up from 6.8% in its June 2024 update for Asia-Pacific. The research firm of Moody's Corporations, however, retained its economic growth forecast for CY25 at 6.5%. The revision comes amid Moody's Analytics' forecast of Asia-Pacific, which says the region will register higher growth than the global economy.

In its Global Macro Outlook 2024-25 in August, Moody's Ratings had also projected the country's real GDP growth in 2024 at 7.2%, up from 6.8% announced previously. India's GDP growth was projected at 6.6% in 2025 vs 6.4% projected earlier.

"The Indian economy is in a sweet spot, with the mix of solid growth and moderating inflation, and over the medium- and longer-term, its growth prospects depend on how well the country can productively tap its substantial pool of labour," Moody's Ratings said.

Among other global agencies, S&P Global Ratings on Monday retained India's growth forecast at 6.8% for the financial year 2024-25 and 6.9% for 2025-26. In its economic outlook for Asia Pacific, S&P Global said it expects the country's central bank to start reducing key interest rates by October. "In India, GDP growth moderated in the June quarter as high interest rates temper urban demand, in line with our projection of 6.8 per cent GDP for the full fiscal year 2024-2025." S&P said the growth will moderate in FY25 from a high base in fiscal 2023–24 but still India remains the fastest economy in the world.

The World Bank earlier this month said the Indian economy would grow at 7% in FY25, which was a revision from its previous estimate of 6.6%. The World Bank said the Indian economy continues to grow at a “healthy pace” despite challenging global conditions, and India’s medium-term outlook remains “positive”. It said India’s economy could also post "strong" growth in FY25/26 and FY26/27 as well. “With robust revenue growth and further fiscal consolidation, the debt-to-GDP ratio is projected to decline from 83.9% in FY23/24 to 82% by FY26/27. The current account deficit is expected to remain 1-1.6% of GDP up to FY26/27.”

The International Monetary Fund (IMF) in July upgraded India's GDP forecast by 0.2 basis points to 7% for 2024-25. "The forecast for growth in India has also been revised upward, to 7.0 per cent, this year, with the change reflecting carryover from upward revisions to growth in 2023 and improved prospects for private consumption, particularly in rural areas," said IMF in its July 2024 World Economic Outlook Update. The IMF kept India's real GDP projections unchanged for the next fiscal year (2025-26) at 6.5%.

The economy had grown at 8.2% in the fiscal year ending March 2024, up from 7% growth in FY23, as per the government data. The forecasts by these global financial agencies are largely in line with the estimates of the Reserve Bank of India (RBI). The central bank expects the economy to grow at 7.2% in FY25. The economic growth in Q1 is pegged at 7.1%, Q2 at 7.2%, Q3 at 7.3%, and Q4 at 7.2%.