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Moody’s Sees Strong Growth for India in 2025, Moderation Afterward
Moody’s Ratings on November 13 projected India’s economy to expand by 7% in 2025, followed by a more moderate growth rate of 6.5% the following year. The forecast highlights continued momentum in domestic demand with an expected gradual easing after a peak year.
What the forecast implies
The projection suggests India will remain one of the fastest-growing major economies, supported by resilient consumption and investment. A 7% growth year ahead can boost business confidence, improve tax receipts, and create more scope for public and private capital spending.
Key drivers likely to support growth
- Domestic consumption: Household spending and services activity are expected to remain important growth engines.
- Investment and infrastructure: Public and private investment plans should sustain demand for construction and related industries.
- Manufacturing and exports: Continued policy focus on manufacturing could lift production and trade performance.
- Labour and demographics: A young workforce and rising urbanisation provide structural support over the medium term.
Risks to watch
- Global slowdown: Weaker external demand or slower global trade could dent export growth.
- Commodity shocks: Sharp rises in oil or food prices would raise inflation and pressure household budgets.
- Policy and fiscal slippage: Any loosening of fiscal discipline or weaker reforms could undermine investor sentiment.
- Financial sector stress: A deterioration in credit conditions or higher non-performing assets could slow lending.
Practical implications for businesses and households
- Businesses may see stronger domestic demand in 2025—opportunities for expansion, hiring, and capital investment.
- Households could benefit from improved job prospects, but should watch inflation and interest rates.
- Policymakers will need to balance growth support with price stability and fiscal prudence to sustain momentum.
Overall, the outlook points to continued economic resilience, with policymakers and market participants keeping an eye on global developments and inflationary pressures as growth normalises after 2025.