NEW DELHI: Moody’s Ratings has revised India’s growth forecast for 2024, increasing it from the previously projected 6.8% to 7.2%. This adjustment is based on expectations for a stronger rebound in private consumption. Meanwhile, for 2025, growth has been pegged at 6.6% from 6.4% previously.
“... These forecast changes assume strong broad-based growth and we recognise potentially higher forecasts if the cyclical momentum, especially for private consumption, gains more traction,” the ratings agency said.
As per Moody’s, household consumption is set to rise as headline inflation approaches the RBI’s target. It noted that indications of a resurgence in rural demand are already visible, driven by favorable agricultural output prospects due to above-average rainfall during the monsoon season.
It highlighted that both the industrial and services sectors have shown robust performance, with the services Purchasing Managers’ Index (PMI) remaining consistently above 60 since the beginning of the year. Moody’s said India’s growth potential in the medium to long-term hinges on the country’s ability to effectively utilise its large labour force. It believes the economy can achieve growth rates of 6-7% based on current conditions.
“...Global growth is stabilising and inflation in most markets is close to RBI targets. We expect global growth will slow to 2.7% and 2.5% in 2024 and 2025, respectively, from 3.0% in 2023, though growth trends differ across countries,” Moody’s said in its report. Meanwhile, Fitch Ratings has affirmed India’s long-term foreign-currency issuer default rating (IDR) at BBB- with a stable outlook.
Consumption to rise
Moody’s says household consumption will rise as headline inflation approaches RBI’s target. It said indications of resurgence in rural demand are visible on favorable agricultural output prospects due to above-average rainfall during monsoon season