The rating agency Moody’s has revised India’s growth forecasts upwards for the calendar year 2024, bringing them from +6.1% to +6.8%
Good news is coming for India. The rating agency Moody’s has revised the country’s growth forecast upwards for the calendar year 2024, bringing them to +6.8% from the +6.1% estimated in precedence based on strong economic data. The change came after the Asian giant reported real GDP growth of +8.4% year-on-year in the December quarter, resulting in +7.6% for 2023-24.
“The Indian economy performed well and stronger-than-expected data in 2023 led us to increase our growth estimate for 2024 from 6.1% to 6.8%,” Moody’s said in its Global Macroeconomic Outlook for 2024, explaining that “India is likely to remain the fastest growing economy among the G-20 economies .”
In the last three months of last year, the Indian economy grew at a rapid pace, driven by strong manufacturing and construction, recording +8.4% compared to the estimated +6.6% by analysts. Delhi’s high-frequency indicators show how its economy’s strong momentum in the third and fourth quarters has continued into the first quarter of the current calendar year.
“Solid goods and services tax collections, rising auto sales, consumer optimism, and double-digit credit growth suggest urban consumption demand remains resilient,” the rating agency added, adding that, on the supply side, “the expansion of manufacturing and services PMI helps demonstrate solid economic momentum.”
What’s happening in India
Moody’s said it expects policy continuity after the general election due in May (with Narendra Modi strong favorite for an unprecedented third term) and a continued focus on infrastructure development. While private industrial capital spending has been slow to recover, Reuters pointed out, it is expected to grow due to continued benefits from supply chain diversification and as investors respond to the government’s plan to revive industries. major manufacturing industries.
Increasing capacity utilization, robust credit growth, and optimistic business sentiment are all factors indicating an improving outlook for private investment, the aforementioned rating agency further clarified. Headline inflation in January, meanwhile, fell to 5.1% from 5.7% the previous month, although it remains well above the central bank’s 4% target.
“Given the solid growth dynamics and inflation above the 4.0% target, we do not expect an easing of monetary policy in the near future,” concluded Moody’s, which expects overall growth in the Asian nation to 2025 equal to +6.5%. We remind you that for the current year, Indian GDP growth is estimated at around +7.6%.
In a few months, national elections will take place in India, and a strong economy could support Modi’s confirmation. While controversial on some fronts, the current prime minister’s market-friendly and reform-oriented policies have been applauded by global investors and seen as a major reason for the strength shown by Indian stocks in recent years. As tax collections rise and the economy grows, Modi may be poised to win another term, potentially dampening election-year volatility in the country’s financial markets.
Modi’s agenda and the future of Delhi
Speaking of Modi, rumors are starting to emerge regarding his agenda should the current leader of Delhi be reconfirmed as prime minister. The Economic Times wrote that a new, possible Modi government will be committed to reviving domestic production, in an attempt to increase the country’s control over global supply chains and increase jobs. A third Modi administration would also focus on reducing trade barriers and improving production-related incentive plans.
Earlier this year, India reduced tariffs on several mobile device components to boost production and make exports competitive. Industries such as textiles, leather goods, and engineering products have all supported the need to reduce import duties.
Modi is meanwhile attracting manufacturers home with strong incentives, such as tax cuts, rebates, and capital support. The strategy is showing initial successes with companies the likes of Apple and Samsung increasing production on Indian territory. However, the World Bank estimated that the manufacturing sector’s share of the country’s gross domestic product will be around 13% in 2022, while the Asian nation hoped to increase that figure to 25% by 2025.
Original article published on Money.it Italy 2024-03-17 07:05:00. Original title: Moody’s alza le previsioni sul Pil indiano per il 2024: Delhi continua a crescere
