Credit rating agency Moody’s said India is expected to remain the fastest-growing economy in the Asia-Pacific region in the second half of the year 2024.

The growth will be fuelled by the domestic demand growth, it said.

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“India will remain the region’s fastest-growing economy, sustaining last year’s domestically driven momentum. We anticipate policy continuity after the general election, and a continued focus on infrastructure development and encouragement of private sector investment,” the credit rating agency said.

On the banking front, the report further said the Indian banking system is on a positive outlook because of good economic growth and healthy corporate credit quality.

As regards the possibility of rate cuts in the region, it notes that the pace of monetary policy normalisation will be uneven across Asia-Pacific (APAC) and the region’s central banks are unlikely to move before the US Federal Reserve, meaning cuts will not come until the second half of 2024 or early 2025.

“Volatile commodity prices elevate risks to this time scale, given most countries in the region are net food and oil importers. The Bank of Japan will remain an outlier, but financial conditions will stay accommodative this year,” the report added.

It further noted that India, Indonesia, and the Philippines were the key growth outperformers in the first half of the year 2024.

They led the way and should continue to outperform pre-COVID growth numbers on the back of rising exports, local demand, and government spending on infrastructure, the report reads.

Recently, the National Statistical Office (NSO) of Ministry of Statistics and Programme Implementation (MoSPI) said India’s GDP growth rate in the quarter ending March 31 grew by 7.8%.

These figures surpass the Reserve Bank of India’s (RBI) estimate of 7%, according to projections made in its April monetary policy review.

World Bank also retained its growth forecast for India at 6.6% for FY25, while maintaining that India is poised to remain the fastest-growing of the world’s largest economies, although its pace of expansion is expected to moderate.