India's growth momentum intact, to remain fastest growing Asia-Pacific economy in 2024: Moody's

Ratings agency Moody's has said India will remain the Asia-Pacific region's fastest-growing economy in 2024, sustaining last year's domestically driven momentum.

In a report, Credit Conditions – Asia-Pacific H2 2024 Credit Outlook, released on June 13, the ratings agency said Indonesia, the Philippines and India led the way in terms of growth in first half of 2024 and should continue to outperform pre-COVID growth numbers on the back of rising exports, local demand and government spending on infrastructure.

"India will remain the region's fastest-growing economy, sustaining last year's domestically driven momentum. We anticipate policy continuity after the general election, and a continued focus on infrastructure development and encouragement of private sector investment," Moody's said.

According to the agency stronger portfolio inflows are likely in India and ASEAN economies, because of robust corporate credit metrics and appealing valuations.

Last month, Moody’s Ratings pegged the growth of the Indian economy at 6.6 percent in the current fiscal year. It said strong credit demand, coupled with the robust economic growth will support the non-bank finance companies (NBFCs) sector’s profitability. 

"We expect India's economy to expand 6.6 per cent in the year ended March 2025 (FY25) and 6.2 per cent the following year, and this will lead to robust loan growth at NBFCs, mitigating the impact of rising funding costs on their profitability," Moody's Ratings said.

Moody’s FY25 GDP growth predictions are lower than the Reserve Bank of India’s (RBI’s), as well as other agencies, but is at par with Deloitte’s forecast. The RBI had projected a growth of 7 percent in the current fiscal for the Indian economy. Asian Development Bank (ADB) and Fitch Ratings have estimated growth at 7 percent each, while S&P Global Ratings and Morgan Stanley expect growth rate to be at 6.8 percent.