Moody's Investor Service significantly revised its outlook for India's economy in 2024 upwards on Monday, attributing it to the robust performance observed in recent quarters.
In a statement issued on Monday, Moody's remarked, "India's economy has demonstrated strong performance, and the better-than-anticipated data in 2023 has prompted us to revise our growth estimate for 2024 to 6.8 percent, up from the previous projection of 6.1 percent."
Moody’s also underscored India's status as the fastest-growing economy among G-20 nations over their forecast horizon.
This development follows after the Indian economy witnessed its swiftest growth in one-and-a-half years during the third quarter of FY24, driven by vigorous manufacturing and construction activities.
Moody's observed that the 8.4 percent expansion during the third quarter surpassed economists' forecasts of 6.6 percent.
According to Moody, indicators monitoring economic activity indicate that the robust momentum from the third and fourth quarters of 2023 has carried over into the initial quarter of the current calendar year.
"Buoyant collections from goods and services tax, escalating auto sales, consumer confidence, and a double-digit surge in credit signify the resilience of urban consumption demand,” noted Moody’s.
Moreover, Moody's expressed assurance regarding the continuity of policy post the forthcoming general election, expected by May, and anticipated a persistent focus on infrastructure development.
Despite the optimistic outlook, Moody's cautioned about inflation persisting above the central bank's target of 4 percent.
"Given the sturdy growth dynamics and inflation exceeding the 4.0 percent target, we do not anticipate policy relaxation in the foreseeable future,” stated Moody’s, suggesting that the central bank is unlikely to reduce interest rates in the near term.
