India GDP growth to slow to 6.1% in CY24 from 7.7% in CY23: Moody’s Analytics
The Asian Development Bank raised India’s GDP growth forecast for FY25 to 7%, from 6.7% earlier, lifted by robust public and private investments and a strong services sector. Last month, Fitch Ratings also raised India’s growth forecast for FY25 to 7% from 6.5%.
Moody's Analytics expects India's GDP to grow at 6.1% in calendar year 2024 (CY24), decelerating sharply from 7.7% in CY23, hurt by a slow recovery from the pandemic and its various aftershocks, and as geopolitical conflicts snap supply chains.
Despite the slowdown, India will still remain the fastest-growing major economy in the world.
It said that a look at GDP relative to its trajectory before the pandemic reveals that India and southeast Asia have seen some of the largest output losses worldwide due to the pandemic and are only beginning to recover. It added that economies in south and southeast Asia will see some of the strongest output gains this year.
"The performance of India and ASEAN economies is flattered by a delayed post-pandemic rebound," Moody's Analytics said in a report titled APAC Outlook: Listening Through the Noise.
The report highlighted that the Asia Pacific (APAC) region overall is doing better than other parts of the world, with the APAC economy slated to grow at 3.8% in 2024, compared to a 2.5% pace for the world economy during the calendar year.
Tensions in west Asia ratcheted up after Iran vowed retaliation alleging Israel attacked its consulate in Syria on 1 April that killed two commanders of its Islamic Revolutionary Guards Corps and five others. Israel continues to wage a war on Gaza, after being attacked by Hamas militants in October last year, even as Russia and Ukraine remain at war.
Earlier this week, the Asian Development Bank raised India’s GDP growth forecast for FY25 to 7%, from its earlier projection of 6.7%, lifted by robust public and private investments and a strong services sector. Last month, Fitch Ratings also raised India’s growth forecast for the ongoing financial year to 7% from 6.5%, projecting investment to be a significant driver of growth.
During the October-December quarter of FY24, the Indian economy surprised with a precipitous 8.4% growth, shrugging off fears of a slowdown, as manufacturing, electricity and construction continued to fire on all cylinders.
This rapid growth prompted a revision by India's National Statistical Office in the GDP growth estimate for FY24 to 7.6%, from 7.3% it had projected earlier.
The Reserve Bank of India (RBI) expects the economy to expand at 7% in FY24, while the International Monetary Fund has pegged GDP growth for the fiscal year ended March at 6.7%.
Others have also raised their forecast for India's GDP growth in FY24. For instance, ratings agency Moody's has revised it to 8%, from 6.6% earlier, citing strong government expenditure and domestic consumption.
On inflation, Moody's Analytics said the outlook for China and India is more uncertain.
"Inflation in India is at the opposite extreme, with recent consumer price inflation rates hovering around 5%, close to the upper end of the Reserve Bank of India's target range of 2 to 6% and without clear evidence of a trend towards slowing price pressures," the report said.
"As inflation moderates and domestic conditions remain soft in much of the region, attention is turning towards when APAC central banks will start easing monetary settings. The focus is on the timing of cuts by the US Federal Reserve," it added.
Earlier this month, the RBI's Monetary Policy Committee kept the benchmark repurchase rate at 6.5% for a seventh straight policy meeting to ensure inflation reaches its target of 4% on a durable basis.
Most economists and experts expect the central bank to stick to its hawkish stance, although some see a chance it could signal rate cuts later during the year.
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Business NewsEconomyIndia GDP growth to slow to 6.1% in CY24 from 7.7% in CY23: Moody’s Analytics
First Published:12 Apr 2024, 09:54 AM IST
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