Context:
Moody’s Analytics has outlined the challenges and expectations for India’s economy in 2025 forecasting a 64 GDP growth despite a weak rupee declining foreign investment and volatile inflation.
Key Highlights:
- Growth Forecast
- Moody’s Analytics anticipates 6.4% GDP growth for India in 2025 requiring strong policy support to overcome economic headwinds.
- Target Fiscal Deficit
- The Budget for FY25 will target a fiscal deficit of less than 4.5% of GDP by the next year that is compared to a target of 5.6% in FY24 and an estimated 4.9% in FY25.
- Economic Risks
- The major risks to India’s economy in 2025 include the following
- A slumping rupee
- Deteriorating foreign investment
- Blurred inflation
- The major risks to India’s economy in 2025 include the following
Policy Response
- Fiscal and Monetary Adjustments
- Moody’s suggests fiscal and monetary policies are expected to need changes mainly in the first half of the year to achieve the 6.4% growth target
- The government is likely to support domestic demand as well as investment key drivers in a growth scenario particularly facing external challenges.
