India’s robust economic growth will continue, real GDP growth will accelerate: Moody’s

Moody's predicts India's GDP growth to accelerate to 8% in 2023-24, benefiting from global trade diversification away from China.

Moody’s Investors Service on March 7 said that India’s robust economic growth will continue and its real GDP growth will accelerate to around 8% in 2023-24 from 7% in 2022-23.

“We expect India to be the fastest-growing economy among major G20 countries... Government capital expenditure and strong domestic consumption will underpin India’s economic growth. Moreover, India is poised to benefit from increased global trade and investment opportunities arising from companies’ strategies to diversify away from China,” the rating major said in an outlook report on India’s banking sector.

The firm expects India’s inflation rate to decline to 5.5% in 2023-24 from a peak of 6.7% in 2022-23, and noted that further disinflation will support monetary policy easing, going forward.

Moody’s growth estimate for this year is higher than the 7.6% estimate projected by the National Statistical Office (NSO) in its second advance national income estimates released on February 29. On March 6, Reserve Bank of India Governor Shaktikanta Das said that real GDP growth is likely to be closer to 8% as the NSO’s current estimate of 5.9% GDP growth for the final quarter of the year may be overshot.

Government capital expenditure and strong domestic consumption will underpin India’s economic growth. Moreover, India is poised to benefit from increased global trade and investment opportunities arising from companies’ strategies to diversify away from China, it said.

“We expect India’s inflation rate will decline to 5.5% in 2023-24 from a peak of 6.7 per cent in fiscal 2022-23, and further disinflation will support monetary easing going forward,” it said.

With regard to the banking sector, the report said, non-performing assets (NPAs) will continue to fall as the operating environment improves.