Moody's ups India's FY27 growth forecast to 7% on strong economic momentum, warns of risks
Moody's Ratings has raised its growth forecast for the Indian economy in 2026-27 to 7% from 6.5%, citing broad-based economic activity and the country's ability to withstand the energy supply shock, PTI reported.
In its Global Macro Outlook 2027-28, released on Wednesday, the US-based ratings agency said robust consumption, improving investment trends and strong macroeconomic fundamentals would support growth. It expects the economy to sustain a pace of close to 7% over the medium term.
However, Moody's flagged risks to the near-term outlook, particularly for household consumption. It said intensifying price pressures could weigh on spending, with retail inflation close to the upper end of the Reserve Bank of India's (RBI) 2-6% target range.
"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," it said.
A deficient southwest monsoon and strengthening El Niño conditions could also hurt agricultural output and rural demand, the agency said.
Moody's said a sustained revival in private investment, if it leads to a significant improvement in manufacturing, employment and productivity, could push economic growth above its baseline projections. However, it cautioned that further RBI rate increases could delay a recovery in private capital expenditure.
The agency also said India had managed the energy price shock better than it had initially expected. The country's ability to diversify crude oil and gas supplies, along with measures such as tax cuts and support through state-backed oil marketing companies, helped shield consumers from the immediate impact of higher energy prices.
India's large refining capacity has also helped contain fuel supply disruptions, while allowing it to remain a major exporter of refined petroleum products, Moody's said.
The agency pointed to signs that private investment could be entering a new growth cycle after years of corporate and banking sector balance sheet repair. Higher capital goods production and imports, faster industrial credit growth and rising capacity utilisation were among the indicators supporting this assessment.
Other indicators also point to steady economic activity, Moody's said, citing growth in manufacturing and services purchasing managers' indexes, along with double-digit year-on-year increases in goods and services tax revenue, vehicle sales and merchandise exports.
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