Moody’s Ratings on Wednesday raised India’s GDP growth forecast from 6.5 per cent to 7 per cent for the current fiscal year, driven by broad-based economic momentum and resilience to energy supply shocks. The ratings agency said India’s economic growth is expected to remain near 7 per cent over the medium term, with sustained private investment potentially pushing growth even higher. “India’s broad-based economic momentum and demonstrated resilience to the energy supply shock warrant upward revisions to our 2026-27 growth forecasts to 7 per cent from 6.5 per cent,” Moody’s said.
In its Global Macro Outlook 2027-28, Moody’s, however, said that near-term risks to growth persist as household consumption remains vulnerable to “intensifying and broadening price pressures”, with headline inflation close to the upper end of the Reserve Bank of India’s (RBI) 2-6 per cent target range, while a deficient southwest monsoon and strengthening El Nino conditions will weigh on agricultural output and rural demand.
Broader economic activity also remains solid amid expanding manufacturing and services purchasing manager indexes.
RBI’s estimate
RBI estimates GDP growth of 7.1 per cent in the current fiscal year, in line with OECD projections. The International Monetary Fund (IMF), ADB and S&P Global Ratings have projected a 7 per cent growth, while Fitch Ratings expects India’s GDP to grow 6.9 per cent.
RBI to raise rates further
However, Moody’s said that with the RBI on track to raise rates further, tighter monetary policy could delay the recovery in private investment.
Moody’s said emerging markets face a more challenging external environment heading into 2027 with higher energy prices, elevated global interest rates and persistent trade and geopolitical uncertainty adding to inflation and financing pressures. At the same time, concerns over the returns on AI investment have emerged as an additional source of volatility.
Quoting Institute of International Finance data, Moody’s said non-resident portfolio flows to emerging markets recorded USD 33.8 billion in outflows in October, following USD 19.3 billion in September, with the pullback concentrated in equities, particularly in Asia.
“As investors become more selective, economies with strong domestic growth drivers, credible policy frameworks and solid buffers should remain relatively resilient,” Moody’s added.
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