The Indian economy will likely grow at 7.1 per cent this fiscal (FY25), Moody's Analytics said on Tuesday, as the country is expected to remain resilient in the face of global uncertainties. The global credit ratings retained the country's growth forecast of 6.5 per cent for 2025 while projecting faster growth of 6.6 per cent in 2026, according to its new Asia Pacific outlook. Moody's Analytics projected better inflation outcomes as it reduced India's inflation forecast to 4.7 per cent from the 5 per cent that was predicted earlier.
The inflation in the country remained sub-4 per cent in July and August. The 2025 and 2026 outlook stood at 4.5 per cent and 4.1 per cent respectively. In Asia Pacific, Moody's increased its 2025 forecast to 4 per cent from 3.9 per cent as it was previously projected. Export growth had been all-important for the region, but growth is set on shaky ground.
Chip, a key export driver, is losing steam, while global goods demand has been soft, Moody's said. Additionally, policy-led ramp-up in exports by China has triggered protectionism abroad, Moody's added. S&P Global Ratings had earlier in the day stuck to its growth estimate for India at 6.8 percent for the fiscal 2024-25.
This said global ratings: The Indian economy had its GDP growth moderate in the June quarter as high interest rates temper urban demand, in line with our projection of 6.8 for GDP for the full fiscal year 2024-25. The rating agency also retained India's growth forecast for FY 2025-26 at 6.9 per cent.
The RBI, however, considers food inflation a hurdle for rate cuts, it said in the report. "Our view remains the same: we expect the RBI to begin rate cuts in October at the earliest and have pencilled in two rate cuts this fiscal year (year ending March 2025)," it added.
The all India consumer price index for August delivered the year-on-year inflation rate of 3.65 percent, which marked one of the second-lowest percentages in the last five years. A medium-term target of 4 percent was crossed below by the inflation rate for the first time ever in July at 3.54 percent.
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