Amidst a fluctuating global economy, India is set to see its economic growth taper to 6.1% in 2024, down from a robust 7.7% the previous year, according to projections by Moody’s Analytics. The forecast, released on a recent Friday, also highlighted an uncertain inflation outlook for the nation.
In the latest report entitled ‘APAC Outlook: Listening Through the Noise,’ the economic analysis wing of the credit rating firm detailed the impacts of the Covid-19 pandemic on the GDP trajectories across Asia. It revealed that both India and Southeast Asia experienced some of the most severe output losses worldwide. India’s overall output, as a result, lingers at 4% below what it could have been without the pandemic and its resulting economic disruptions, which ranged from supply chain hiccups to international military conflicts.
In comparison, the ASEAN (Association of Southeast Asian Nations) region fared even worse, with their GDP projections falling short by 6% due to the pandemic. Globally, the output loss is estimated at about 2%, indicating a broader resilience.
Regarding inflation, the Moody’s Analytics’ report points out the unpredictability for Asia’s giants, China and India. India, in particular, is grappling with consumer price inflation rates that are teetering around the 5% mark. This figure is at the higher end of the Reserve Bank of India’s target range of 2% to 6%. Despite these pressing rates, there is no definitive indication of dissipating price pressures.
March brought some reprieve in terms of retail inflation, which dipped to 4.85%, marking a five-month low, thanks to declining food prices. The official data aligning with this decrease was also made public on the same Friday. Still, the Reserve Bank of India (RBI) maintains a cautious stance. It reiterated that uncertainties related to food prices cast a shadow on the inflation path ahead, and it has retained its retail inflation projection at 4.5% for the 2024-25 period.
Not to be overlooked are the ongoing geopolitical tensions that continue to threaten commodity price stability and supply chain integrity, the RBI cautioned. Such risks could further strain the economic outlook if they escalate.
On an optimistic note, the Moody’s Analytics report suggests that the broader Asia Pacific region is faring better than other global economies. It estimates that the APAC economies will collectively expand at a rate of 3.8% this year, outpacing the global growth rate projected at 2.5%.
This projection, emerging amidst a complex environment of recovering economies and persistent external threats, highlights the resilience and dynamic nature of the region. Still, policymakers and economic stakeholders remain watchful, keeping an eye on numerous indicators that will determine the stability and growth of their respective nations.
The economic trajectory for India suggests moderation, warranting continuous monitoring by the central bank to balance growth with stability. As the nation moves forward, the nurturing of a gradual recovery is key in a world where uncertainties are a given, and the discernment to ‘listen through the noise’ becomes a vital skill for economic forecasting and planning.
