India’s Q2 indicators signal steady momentum: Moody’s Ratings

Moody's Ratings optimistic on India's growth despite concerns, projecting steady economic momentum and robust household consumption.

Amid concerns about some slackening of the growth momentum with weakening urban demand and underwhelming corporate results in the July to September quarter or Q2, Moody’s Ratings on Friday (November 15, 2024) took a sanguine stance on India’s growth prospects for the quarter citing “steady economic momentum” and asserted that household consumption is “poised to grow”.

The global rating major’s assessment assumes significance coming ahead of the official Q2 GDP growth estimates that are scheduled to be released at the end of November.

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A recent article by Reserve Bank of India (RBI) officials in its October bulletin, had projected Q2 GDP growth at 6.8%, marginally higher than the 6.7% rise in Q1 of 2024-25, based on an economic activity index. However, some economists are not as confident. State Bank of India’s economic research team has pegged Q2 GDP growth at 6.5%, for instance.

“India’s economy is growing robustly and has the potential to sustain high growth rates as strong private sector financial health reinforces a virtuous economic cycle,” Moody’s Ratings said in its global macro outlook for 2025-26, noting that Q1 growth was driven by a revival in household consumption, robust investment and strong manufacturing activity.

“High-frequency indicators – including expanding manufacturing and services PMIs, robust credit growth and consumer optimism – signal steady economic momentum in Q3. Indeed, from a macroeconomic perspective, the Indian economy is in a sweet spot, with the mix of solid growth and moderating inflation,” it reckoned.

The agency has forecast a 7.2% growth for India in the calendar year 2024, followed by 6.6% in 2025 and 6.5% in 2026.