Moody’s maintains confidence in India’s economy, says 6.7 percent growth rate due to strong domestic demand

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Moody’s Investors Service has maintained India’s economic growth forecast for 2023 at 6.7 percent. Moody’s believes that due to strong domestic demand in the country, the pace of growth will continue in the near future. With exports remaining weak due to the adverse global economic backdrop, Moody’s said in its ‘Global Macroeconomic Outlook-2024-25’ that sustained growth in domestic demand is driving India’s economy forward.

Moody’s said that we expect India’s real gross domestic product (GDP) growth rate to increase by about 6.7 percent in 2023, 6.1 percent in 2024 and 6.3 percent in 2025. India’s economic growth rate was 7.8 percent in the June quarter, which was 6.1 percent in the March quarter. The country’s economic growth has been strong due to strong domestic consumption, solid capital expenditure and rapid service sector activity.

Moody’s said strong Goods and Services Tax (GST) collections, rising vehicle sales, rising consumer confidence and double-digit credit growth suggest that urban consumption demand will remain robust amid the current festive season. However, rural demand, which is showing early signs of recovery, remains a matter of concern due to uneven monsoon. This may reduce crop production and agricultural income.

Moody’s said that although core inflation also eased to 4.5 per cent from 4.8 per cent in August, the risks to the upside of consumer price index-based inflation are due to possible increases in food and energy prices amid uneven weather and geopolitical uncertainty. The Reserve Bank will adopt a cautious approach regarding this.

Earlier in the month of September, global rating agency Moody’s Investors Service had increased its growth forecast for the calendar year 2023 from 5.5 percent to 6.7 percent, expressing confidence in the Indian economy. The report said that India’s rate of potential economic growth has seen a decline in the last seven to ten years.

,with language input,

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