CHENNAI: Despite many beginning to re-relook at their growth forecasts— unlike the Reserve Bank which has been sticking its neck out with the 7.2% growth this fiscal, global rating agency Moody’s has upped its calendar year 2024 GDP outlook to 7.2%, saying “the Indian economy is in a sweet spot, with a mix of solid growth and moderating inflation.” The agency has also pegged its 2025 growth 6.6% and 6.5% in the next.
The forecast comes amid the likely heightened trade wars and resultant tension with the return of Donald Trump as the next US president who had said would slap higher duties on Chinese and Indian imports to the tune of 40% and 20%, respectively.
In its global macro outlook 2025-26 released on Friday, the agency said the real GDP grew 6.7% year-on-year in June quarter, driven by a revival in household consumption, robust investment and strong manufacturing activity and high-frequency indicators, including expanding manufacturing and services PMIs, robust credit growth and consumer optimism, signal steady economic momentum in the rest of the year.
“Indeed, from a macroeconomic perspective, the Indian economy is in a sweet spot, with the mix of solid growth and moderating inflation. We forecast 7.2% growth for calendar year 2024, followed by 6.6% in 2025 and 6.5% in 2026,” Moody’s said.
The report said household consumption is poised to grow (though every report, including those by RBI point to a serious slackening in urban markets), fuelled by increased spending during the ongoing festive season and a sustained pickup in rural demand on the back of an improved agricultural outlook.
Additionally, rising capacity utilisation, upbeat business sentiment and government’s continued thrust on infra spending should support private investment. “Sound economic fundamentals, including healthy corporate and bank balance-sheets, a stronger external position, and ample forex reserves also bode well for the growth outlook,” it added.
On inflation hitting a 14-month high of 6.2% in October, the report said, “despite the near-term uptick, inflation should moderate toward the RBI’s target in the coming months as food prices ease amid higher sowing and adequate food grain buffer stocks.”
As per Crisil, GDP is anticipated to adjust to 6.8% in FY25, compared to FY24, where it was on a rapid growth trajectory of 8.2%. This slowdown is expected on account of higher interest rates (the cost of borrowing money) and stricter lending rules, according to the rating agency Credit Rating Information Services of India Limited (CRISIL).