Moody's Upgrades India's GDP Growth Forecast For 2024 To 6.8 Per Cent; Economy Remains Fastest Growing Among G-20 Nations

Moody's, the global rating agency, has revised its gross domestic product (GDP) growth forecast for India in 2024 upwards to 6.8 per cent from the earlier estimate of 6.1 per cent.

This adjustment is attributed to India's strong economic performance in 2023 and the easing of global economic challenges, as per a report by The Economic Times.

India's economy exceeded expectations by growing at 8.4 per cent in the October-December quarter, surpassing analysts' predictions of 6.6 per cent.

This robust growth was fuelled by the government's capital spending and a thriving manufacturing sector.

Moody's expects India to maintain its position as the fastest-growing economy among the G-20 nations.

High-frequency indicators suggest that the strong momentum seen in the September and December quarters of 2023 has continued into the March quarter of 2024.

Factors such as robust goods and services tax collections, rising auto sales, and consumer optimism indicate resilient urban consumption demand. Additionally, expanding manufacturing and services PMIs point to solid economic momentum.

Looking ahead, Moody's anticipates a continuation of policy continuity after the general election and a continued focus on infrastructure development.

While private industrial capital spending has been slow, it is expected to pick up due to ongoing supply chain diversification benefits and the government's Production Linked Incentive scheme.

Moody's notes that 2024 is an election year for several G-20 countries, including India, and that the outcomes of these elections will influence domestic and foreign policies for the next four to five years.

Geopolitical realities will have a significant impact on international trade flows, capital flows, and international organisations in the years to come. Domestically, industrial and trade policies of several countries are intertwined with foreign policy, adding to the complexity of the global economic landscape.

Despite these challenges, India's economic growth is expected to remain resilient.

However, sustaining investment growth in the medium term will depend heavily on strengthening consumption growth. The escalation of global geopolitical tensions and slowing external demand could pose additional risks to the external sector.

Also read: Moody's Downgrades China's Credit Ranking From Stable To Negative Citing Continuous Contraction Of Property Sector