Moody’s Analytics, a leading ratings agency, has issued a nuanced projection regarding India’s economic trajectory for the fiscal year 2024-’25. Despite a robust growth of 7.7% in the previous fiscal year, Moody’s Analytics anticipates a slight deceleration with a projected GDP growth rate of 6.1% for India. This adjustment reflects the lingering impact of the Covid-19 pandemic and subsequent disruptions, including challenges within the supply chains exacerbated by the recent Ukraine-Russia conflict.
The report, titled "APAC Outlook: Listening Through the Noise," highlights that while South and Southeast Asian economies are poised for substantial growth, much of it is attributed to a delayed rebound post-pandemic. Moody’s Analytics underscores the significance of India’s GDP growth moderation, emphasizing the country’s economic output being 4% below its potential sans the pandemic-induced disturbances.
Moreover, the analysis indicates a notable contrast between the Asia Pacific region's projected growth rate of 3.8% and the global economy's expected growth of 2.5% this year. However, it also points out that despite the optimistic outlook, both India and Southeast Asia continue to grapple with some of the most significant output losses globally.
Stefan Angrick, Senior Economist, and Jeemin Bang, Associate Economist at Moody’s Analytics, underscore the uncertainties surrounding inflation projections, particularly for China and India. With India's consumer price inflation hovering around 5%, near the upper threshold of the Reserve Bank of India’s target range, the report emphasizes the absence of a definitive trend indicating a slowdown in price pressures.
Contrary to Moody’s Analytics’ projection, the Reserve Bank of India’s Monetary Policy Committee remains optimistic, forecasting a real GDP growth of 7% for 2024-’25. However, despite the positive outlook, the committee has chosen to maintain the repo rate at 6.50%, unchanged for the seventh consecutive time. The repo rate, a pivotal tool in monetary policy, influences borrowing costs and reflects the central bank’s stance on stimulating economic activity.
In essence, while differing perspectives exist regarding India’s economic trajectory, Moody’s Analytics underscores the complexity and uncertainty surrounding factors such as inflation and geopolitical events, urging vigilance amidst the evolving economic landscape.
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