India is set to maintain its position as the fastest-growing economy in the Asia-Pacific region in 2024, according to a recent report by Moody's Ratings.
The report, titled "Credit Conditions – Asia-Pacific H2 2024 Credit Outlook," was released on June 13 and highlights the sustained domestically driven momentum that India has experienced since last year.
Moody's emphasized that India, along with Indonesia and the Philippines, led the region in terms of growth during the first half of 2024. This robust performance is expected to continue, driven by rising exports, strong local demand, and significant government spending on infrastructure.
"India will remain the region's fastest-growing economy, sustaining last year's domestically driven momentum. We anticipate policy continuity after the general election and a continued focus on infrastructure development and encouragement of private sector investment," the report stated.
The ratings agency also pointed out that stronger portfolio inflows are likely in India and other ASEAN economies due to robust corporate credit metrics and appealing valuations. This influx of investment is expected to further bolster economic growth in these regions.
In May, Moody's pegged the growth of the Indian economy at 6.6 percent for the current fiscal year. The agency noted that strong credit demand, combined with robust economic growth, will support the profitability of non-bank finance companies (NBFCs) in India.
"We expect India's economy to expand 6.6 percent in the year ended March 2025 (FY25) and 6.2 percent the following year, and this will lead to robust loan growth at NBFCs, mitigating the impact of rising funding costs on their profitability," Moody's stated.
Moody's growth predictions for FY25 are slightly lower than those of the Reserve Bank of India (RBI) and other agencies. The RBI has projected a growth rate of 7 percent for the current fiscal year, while the Asian Development Bank (ADB) and Fitch Ratings also estimate growth at 7 percent. S&P Global Ratings and Morgan Stanley have forecasted a growth rate of 6.8 percent for the Indian economy.
Despite these variations in projections, Moody's remains optimistic about India's economic prospects, citing strong domestic drivers and a favorable investment climate as key factors in maintaining the country's growth trajectory.
"As India continues to focus on infrastructure development and private sector investment, it is well-positioned to lead the Asia-Pacific region in economic growth through 2024", Moody's affirmed.
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