India will likely retain the fastest-growing G20 economy tag, with the bigger G20 emerging economy China seen growing 4.7%. Overall, the G20 economies will expand 2.8% in 2024, slower than 3% in 2023, according to the Global Macro Outlook 2025-26 report released Friday.
The relocation of supply chains, investment from multinational companies and Chinese domestic manufacturers seeking to diversify production are creating opportunities for India, Mexico and many Southeast Asian nations, per the report.
“Most G20 economies will experience steady growth and continue to benefit from policy easing and supportive commodity prices,” said Madhavi Bokil, Senior Vice President at Moody’s Ratings and the author of the report.However, she cautioned that post-election shifts in the US’ domestic and international policies could potentially accelerate global economic fragmentation, complicating the ongoing stabilisation. While the US is outperforming other advanced economies, its growth is expected to slow despite the strong momentum, the report noted.
In the second quarter of 2024, India’s real gross domestic product (GDP) grew 6.7% year-on-year, fuelled by a rebound in household consumption, strong investment and manufacturing activity.
Indicators such as the manufacturing and services Purchasing Managers Index (PMI), healthy credit growth, and consumer optimism suggest a steady economic momentum in the third quarter, the report mentioned.
India’s outlook remains robust, as per the report, with household consumption set to increase due to higher spending during the festive season and a recovery in rural demand.
Moreover, rising capacity utilisation, positive business sentiment, and the government’s continued infrastructure spending should support private investment. Healthy corporate and bank balance sheets, along with abundant foreign exchange reserves will further contribute to India’s growth.
Retail inflation surged to 6.2% in October, exceeding the Reserve Bank of India’s (RBI’s) target range of 4% (+/-2%) due to a rise in vegetable prices.