‘Fastest growing among G20 economies’: Moody’s raises India’s 2024 GDP forecast to 6.8% from 6.1%

Global rating agency Moody’s has raised India’s growth forecast for 2024 calendar year to 6.8 per cent from 6.1 per cent estimated earlier on the back of strong economic data. This comes after India reported its real GDP growth at 8.4 per cent on-year in the December quarter, resulting in a 7.6 per cent for 2023-24.

Moody’s upgrade comes on the back of 'stronger-than-expected' economic data of 2023, and after Barclays revised its forecast by a 110 basis points to 7.8 per cent for 2023-24 after the December quarter figures as well. 

"India's economy has performed well and stronger-than-expected data in 2023 has caused us to raise our 2024 growth estimate to 6.8 per cent from 6.1 per cent. India is likely to remain the fastest growing among G-20 economies over our forecast horizon," Moody's said in its Global Macroeconomic Outlook for 2024. It predicted 2025 growth to be 6.4 per cent. 

Moody’s Investors Service said that capital spending by the government and strong manufacturing activity have meaningfully contributed to the robust growth outcomes in 2023. It said that with the fading of global headwinds, the Indian economy should comfortably register 6-7 per cent real GDP growth. 

The agency said that the strong momentum of the December quarter carried into the March quarter of 2024 as well. It listed robust GST collections, auto sales, consumer optimism, double-digit credit growth, resilient urban consumption, expanding manufacturing and services PMIs as drivers of the solid economic momentum. 

Moody’s also expects policy continuity after the general election and a continued focus on infrastructure development. While private industrial capital spending has been slow to pick up, it is expected to pick up with ongoing supply chain diversification benefits and investors’ response to the Production Linked Incentive scheme to boost key targeted manufacturing industries.

The agency also highlighted the implications of the elections that could go beyond borders and economic and public policy. Several G20 countries including India, Indonesia, Mexico, South Africa (Ba2 stable), the UK and the US are going to the polls this year. Moody’s believes that the leaders elected will influence both domestic and foreign policies for the next 4-5 years, leading to evolving geopolitical dynamics and reorganised supply chains.