According to the Global Rating Agency, Moody’s Ratings, the Indian economy is in a “sweet spot”, with a mix of solid growth and moderating growth. It has projected India’s Gross Domestic Product (GDP) growth rate at 7.2% for Calendar Year 2024 (CY24).
- It has also estimated India’s GDP growth for the CY25 and CY26 at 6.6% and 6.5%, respectively.
- These projections were made by Moody’s in its latest “Global Macro Outlook for 2025-26”.
India-Specific:
i.As per the report, the household consumption is expected to grow, driven by increased spending during the ongoing festive season and a sustained pickup in rural demand on the back of an improved agriculture outlook.
- Additionally, the government’s infrastructure investment and increasing business sentiment should promote private investment.
ii.The report highlighted that India’s real GDP grew by 6.7% Year-on-Year (Y-o-Y) in 2nd Quarter (Q2: July to September) of CY24, which was mainly attributed by strong household consumption, robust investment, and strong manufacturing activity.
- Also, the high-frequency indicators including expanding manufacturing and services Purchasing Managers’ Indexes (PMIs), robust credit growth and consumer optimism, indicate steady economic momentum in Q2 of CY24.
iii.The report observed that despite the near-term uptick, retail inflation should moderate toward the Reserve Bank of India (RBI)’s target in the upcoming months as food prices stabilize amid higher sowing and adequate food grain buffer stocks.
iv.As per the report, India’s retail inflation surged to a 14-month high of 6.21%, breaching the RBI’s inflation tolerance range of 2% to 6%, amid a sharp increase in vegetable prices.
- It also mentioned that sporadic food price pressures continue to inject volatility in India’s disinflation trajectory.
v.The report cautioned that increased geopolitical tensions and extreme weather events could pose additional inflation risks, which would probably keep the RBI cautious about easing its policy.
Global Scenario:
i.The report noted that the global economy has shown remarkable resilience in bouncing back from supply chain disruptions during the COVID-19 pandemic, an energy and food crisis after the Russia-Ukraine war began, among others.
ii.The report has estimated that the most of the Group-20 (G20) countries (which account for 78% of global GDP) will grow at 2.8% in 2024, from 3% in 2023, which will further reduce to 2.6% and 2.5%, over 2025 and 2026, respectively.
- While, G-20 emerging economies are expected to grow at 4.3% in 2024, down from 4.8% in 2023 and then decline to 3.9% and 3.8% in 2025 and 2026, respectively. This decrease is mainly due to continuing slowdown in the Chinese economy amid considerable external headwinds.
iii.The report cautioned that the geopolitical tensions, especially between the USA and China, remain significant risks to the global economic outlook.
- The report noted that increasing trade protectionism and efforts to bolster domestic industries in large economies may make external demands less reliable.
Recent Related News:
On 10th October 2024, the World Bank released a report titled “South Asia Development October 2024 Update: Women, Jobs and Growth”. It has retained India’s Gross Domestic Product (GDP) growth forecast for Financial Year 2024-25 (FY25) to 7% Year-on-Year (Y-o-Y).
- It has also retained India’s GDP growth forecast at 6.7% for FY26 (2025-26).
About Moody’s Ratings:
President- Michael West
Headquarters- New York, the United States of America (USA)
Founded – 1909
