Moody's Investor Service, a leading global ratings agency, has revised its gross domestic product (GDP) forecast for India, reflecting the nation's impressive economic performance in recent quarters. The agency now anticipates a sturdy growth trajectory extending into 2024.
"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," Moody's stated in its latest report. The agency also highlighted India's confidence in maintaining its status as the fastest-growing economy among G-20 nations over the forecast period.
The revision comes on the back of India witnessing its economy expanding at its swiftest pace in a year and a half during the final quarter of 2023, driven notably by robust manufacturing and construction activity. The recorded growth rate of 8.4 per cent exceeded economists' projections of 6.6 per cent.
Moody's pointed out that the momentum from the third and fourth quarters of 2023 has seamlessly flowed into the first quarter of the current calendar year, as evidenced by high-frequency indicators.
"Robust goods and services tax collections, rising auto sales, consumer optimism, and double-digit credit growth suggest urban consumption demand remains resilient," Moody's observed.
Indicators on the supply side, such as expanding manufacturing and services PMIs, further boosted the evidence of solid economic momentum. The agency stressed the continuation of policies post the upcoming general elections expected by May, along with a sustained emphasis on infrastructure development.
Although private industrial capital spending has been sluggish, Moody's expects a rebound fueled by ongoing benefits from supply chain diversification and the government's initiatives to bolster key manufacturing sectors.
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