Indian economy in a sweet spot: Moody’s

Moody’s Ratings has given thumbs up to the Indian economy, saying that it will continue to grow at a brisk pace, 7.2 per cent in 2024, as compared with 7.7 per cent in the previous year.

In its Global Macro Outlook released today, it said, “Indian economy is in a sweet spot, with a mix of solid growth and moderating inflation. We forecast 7.2% growth for calendar year 2024, followed by 6.6% in 2025 and 6.5% in 2026.”

“High-frequency indicators—including expanding manufacturing and services PMIs, robust credit growth and consumer optimism—signal steady economic momentum in Q3,” Moody’s Ratings said.

“Household consumption is poised to grow, fueled by increased spending during the ongoing festive season and a sustained pickup in rural demand on the back of an improved agricultural outlook,” it further said.

It also forecast inflation to ease in the coming months, “Despite the near-term uptick, inflation should moderate toward the RBI’s target in the coming months as food prices ease amid higher sowing and adequate food grain buffer stocks,” the Moody’s report said.

India’s inflation climbed to a 14-month high of 6.2 per cent in October, breaching RBI’s upper limit of 2-6 per cent band and dashing hopes of a rate cut in the December meeting. “Although the central bank shifted its monetary policy stance to neutral while keeping the repo rate steady at 6.5% in October, it will likely retain relatively tight monetary policy settings into next year given the fairly healthy growth dynamics and inflation risks,” Moody’s said.