Moody’s Upgrades India’s Economic Growth Forecast to 7.1% for CY 2024

Moody’s has revised its forecast for India’s GDP growth in calendar year (CY) 2024, raising it to 7.1% from its earlier projection of 6.8% made in June. This upgrade highlights India’s key role in driving growth in the Asia-Pacific region, which is expected to outperform global economies in the coming years. Other global institutions like the World Bank and the IMF have also adjusted their projections, reflecting increasing confidence in India’s economic momentum despite potential global challenges.

Recent Global Forecasts

• World Bank: Revised India’s fiscal year 2025 (FY25) growth forecast to 7%, citing government infrastructure spending, increased real estate investments, favorable monsoon, and private consumption.
• IMF: Upgraded India’s GDP growth for FY25 by 20 basis points to 7%.

India’s Growth in FY24 and FY25 Outlook

India’s economy grew at 8.2% in FY24, driven by strong domestic demand, investments, and a robust services sector. While growth slowed to 6.7% in Q1 FY25, largely due to muted government expenditure and uneven monsoons, experts expect a rebound in the coming quarters. The Reserve Bank of India (RBI) forecasts 7.2% growth for FY25.

Key Drivers of India’s Economic Resilience

• Domestic Demand & Consumption: Sustained growth is supported by strong domestic demand, rising private consumption, and investments in real estate.
• Services Sector: IT, finance, and retail, driven by digitalization and technological advancements, are major contributors to GDP growth.
• Government Initiatives: Infrastructure development and reforms have bolstered economic stability, with an emphasis on manufacturing growth.

Challenges Ahead

While the growth forecast remains optimistic, India faces challenges from global economic uncertainties, supply chain disruptions, geopolitical tensions, and commodity price fluctuations. Additionally, climate change, inflationary pressures, and monsoon variability may affect the economic trajectory.