Slowdown in Indian economy will impact Asia-Pacific region’s upturn in 2025: Moody’s Analytics

Moody’s Analytics on Tuesday said that normalising growth in India will impact the performance of the Asia Pacific (APAC) region in 2025, as the Indian economy is projected to grow at 6.5 per cent in 2025 from an estimated 7.1 percent in 2024.
“Inflation in developing Asia will slow to 5.1 percent in 2024 and 4.9 percent in 2025, with sluggish economic inflation in China a key factor. Weak domestic demand will push Chinese domestic growth to 4.7 percent in 2024, well behind the official 5 percent target. Growth will slow to 4.6 percent in 2025,” Moody’s Ratings subsidiary said.
“Normalising growth in India will also impact the sector’s performance. After a strong post-pandemic recovery to 7.8 percent in 2023, Indian gross domestic product (GDP) growth will slow to 7.1 percent in 2024 and 6.5 percent in 2025,” the report said.
Moody’s Analytics revised India’s growth forecast for 2024 to 7.1 percent from 6.8 percent estimated in June.
However, global credit rating agency S&P Global on Tuesday retained India’s growth forecast for 2024-25 at 6.8 percent and expressed hope that the Reserve Bank of India (RBI) will start cutting interest rates from its October monetary policy review.
“The RBI views food expansion as an impediment to rate cuts. It believes that unless there is a sustained and meaningful decline in the rate of food price increase, it will be difficult to sustain headline inflation at 4 percent. Our outlook remains unchanged: we expect the RBI to begin cutting rates in October at the earliest and plan to cut rates twice this fiscal year,” S&P said in its latest economic outlook for Asia-Pacific.
Further, the rating agency retained its GDP growth forecast for FY26 at 6.9 percent and said solid growth in India will help the RBI focus on bringing inflation in line with its target.
S&P expects inflation to average 4.5 percent in FY25. Moody’s Analytics has also predicted better inflation outcomes, as it has lowered India’s inflation forecast to 4.7 percent from 5 percent earlier.