Moody's Predicts a Potential Slowdown in GDP Growth to 6.1% in 2024

Moody's analytics recently predicted a GDP growth slowdown for India's economy. It is likely to grow by 6.1% in 2024, a dip from the 7.7% growth in 2023. This projection comes in light of the lingering effects of the COVID-19 pandemic and its aftermath, including supply chain disruptions and global conflicts. While Southeast and South Asian economies are expected to show strong growth this year, the rebound is somewhat delayed due to the lingering impacts of the pandemic.

In a report named 'APAC Outlook - Listening Through the Noise', the analytics of the rating agency highlighted that the Asia Pacific region is performing better than other global regions, with an expected growth rate of 3.8% compared to the global growth rate of 2.5%.

The report also stressed that Southeast Asia and India have suffered notable declines in output compared to their pre-pandemic trajectory and are only now starting to recover. However, the inflation outlook for India and China remains uncertain. Factors contributing to the anticipated economic deceleration include ongoing challenges from the COVID-19 pandemic and geopolitical tensions.

Consumer price inflation in India has been averaging about 5%, close to the upper bound of the Reserve Bank of India's target range of 2 to 6%, with no discernible signs of slowing down in price pressures. Global economic influences also contribute to this inflationary trend.

The RBI has expressed concerns about food price uncertainties that are likely to impact future inflation trends. Despite this, the RBI maintained its projection for retail inflation at 4.5% for the financial year 2024-25. Economic forecast indicates challenges ahead despite stabilization efforts.

Geopolitical tensions continue to pose risks to commodity prices and global supply chains, according to the RBI. The RBI forecasts inflation rates of 4.9% - June quarter, 3.8% - September quarter, 4.6% - December quarter and 4.7% - March quarter.