A recent projection by Moody’s Analytics anticipates a deceleration in India’s economic growth to 6.1 percent in 2024, compared to the robust 7.7 percent expansion witnessed in 2023. The report, revealed on a Friday, highlights India’s ongoing struggle to recuperate economically in the aftermath of the COVID-19 pandemic, noting that the nation’s output lags approximately 4 percent behind its potential trajectory had the pandemic not occurred and without considering impediments such as supply-chain disruptions and international military conflicts.
Titled ‘APAC Outlook: Listening Through the Noise’, the report places India along with economies in South and Southeast Asia as some of those anticipating the most significant output gains. Notwithstanding such gains, it’s clear that they come off the back of an overdue post-pandemic recoil. “We expect India’s GDP to grow 6.1 percent in 2024 after 7.7 percent last year,” forecasts Moody’s Analytics, spotlighting the gradual pace of recovery expected for the subsequent year.
The broader Asia Pacific (APAC) region is on a trajectory to outshine other global areas, with an anticipated growth rate of 3.8 percent this year, overtaking the predicted global economic increase of 2.5 percent. This differential suggests a regional resilience in the face of global economic headwinds. In the context of GDP, the report reflects on the significant losses Southeast Asia and India have incurred in comparison with prior pandemic paths, marking them among the hardest-hit regions globally.
Inflation, as a pivotal economic factor, remains uncertain particularly for China and India. The report, authored by Stefan Angrick, Senior Economist, and Jeemin Bang, Associate Economist at Moody’s Analytics, draws attention to India’s inflation scenario, which hovers near 5 percent. This rate is precariously close to the upper limit of the Reserve Bank of India’s (RBI) target range of 2 to 6 percent. Furthermore, there’s scant evidence to conclusively indicate an imminent slowdown in mounting price pressures.
Earlier in the month, the RBI highlighted the continuing uncertainties surrounding food prices and how they continue to influence the trajectory of inflation. The bank has decided to retain its retail inflation projection at 4.5 percent for the fiscal year 2024-25. However, geopolitical tensions, that strain commodity prices and supply chains, remain as potential risks that could provoke further inflationary trends.
According to RBI’s inflation forecast, the June quarter is set to see a 4.9 percent inflation rate, with a following decrease to 3.8 percent in the September quarter. Inflation rates are expected to climb slightly to 4.6 percent by the December quarter and ascend marginally to 4.7 percent by the March quarter of the next fiscal year.
The report by Moody’s Analytics underscores the complexity of economic forecasting at a time of global uncertainty. COVID-19 has left indelible marks on the world economy, with countries grappling not only with the health repercussions but with profound economic shifts. India, with its considerable population and significant role in international markets, remains at the heart of such transformations.
India’s economic rebound is of considerable significance to the international community. The country’s ability to surmount inflationary hurdles, manage supply chain complications, and navigate geopolitical tensions will be pivotal in achieving the projected growth rates. Moreover, the vitality of the APAC region, portrayed as resilient amid global economic tumult, holds promise for a stable economic environment that might buffer against broader global economic trends.
Analysts anticipate that a combination of prudent monetary policies, fiscal measures, and structural reforms could potentially steer India towards a sustainable growth path, notwithstanding the slower projected growth in 2024. Nevertheless, vigilance and adaptability remain essential, as the nation’s economy contends with the intertwined challenges of post-pandemic recovery and ongoing global uncertainties.
