Moody’s Analytics pegs the Indian economic growth to slow down to 6.1% for the calendar year 2024 (CY24), a falloff from 7.7% in CY23, on the foot of sluggish recovery from pandemic wounds and a puncture to the supply chain caused by geopolitical conflicts.
Notwithstanding the slow growth, India will become among the fastest-growing major economies in the world.
Had not the COVID pandemic and its aftershocks bruised the Indian economic growth, output in India would have yielded 4 percent higher. The supply chain downside and global military conflicts dampened its progress.
“The performance of India and ASEAN economies is flattered by a delayed post-pandemic rebound,” said Moody’s Analytics in a report titled APAC Outlook: Listening Through the Noise.
The report underlined that the Asia Pacific (APAC) region cumulatively is outperforming other parts of the world, with the APAC economy expected to grow at 3.8% in 2024, against 2.5% growth for the world economy during the same year.
Conflict in Western Asia escalated after Iran pledged to give a befitting reply to Israel on an alleged attack on its consulate in Syria on 1 April, resulting in the killing of two commanders of its Islamic Revolutionary Guards Corps and five others.
Israel, on the other hand, has not yet ceased its barbaric retaliation on Gaza after Hamas militants attacked it from land, water, and air in October last year. Parallely, Ukraine and Russia are at loggerheads to come to settling terms.
On the inflation outlook in India, Moody’s Analytics flagged iffy prospects. It said, “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 week, the Asian Development Bank (ADB) increased its estimate for India’s GDP growth for FY25 to 7%, from its earlier forecast of 6.7%, because of vigorous public and private investments and a strong services sector.
Fitch Ratings also expects an uptick in the Indian economic growth to 7% from 6.5% for the ongoing financial year, driven by robust investments.
India’s National Statistical Office also revised its GDP growth forecast for FY24 to 7.6%, from 7.3% earlier.
However, the Reserve Bank of India (RBI) is more optimistic about the Indian economy growth, with a projection surpassing what NSO estimated in the current financial year (FY24). RBI expects GDP growth to be close to 8 percent.
RBI sees real GDP grow by 7 percent in the ongoing fiscal. The GDP growth may expand by 7.2 percent in the June 2024 quarter, moderating to 6.8 percent in the September 2024 quarter, picking up pace in the December 2024 quarter to 7 percent. In the March 2025 quarter, GDP growth will inch toward 6.9 percent.