Moody’s raises India’s growth forecast for 2023 to 6.7%, post April-June GDP spurt
India’s growth forecast to 6.7% in 2023 from 5.5% projected earlier, as the Indian economy recorded 7.8% growth in the April-June quarter.
“Strong services expansion and capital expenditures propelled India’s 7.8% real GDP growth in the second
quarter from a year ago,” Moody’s said in its report.
However, the rating and research agency lowered the 2024 forecast down to 6.1% from the 6.5% projected earlier.
“Since the second quarter outperformance creates a high base in 2023, we have lowered our 2024 growth forecast from 6.5% to 6.1%. Given the robust underlying economic momentum, we also recognize further upside risk to India’s economic growth performance,” it said.
On the inflation front, the rating agency expects inflation to average 5.7% in 2023, a tad below the Reserve Bank of India’s upper target band of 6%.
In July, inflation at 7.4%, crossed the Reserve Bank of India’s upper target band for the first time.
Experts indicate that inflation is likely to remain above 7% in August.
Moody’s projected inflation to decline to 5.2% in 2024, indicating that moving closer to RBI’s target of 4% would take longer.
The rating and research firm indicated that the recent spike in prices due to vegetable price shock will delay the rate cut further.
“The recent uptick in food price inflation and uncertain El Niño-related weather conditions will delay monetary policy easing consideration to early next year. Domestic demand in India remains buoyant, and as long as core inflation remains relatively stable, rate hikes are also unlikely,” the agency stated.
Moody’s also raised concerns that commodity prices rising, along with robust demand and labour markets also weighing on inflation.
“A more important risk to food prices is the
