Indian economy likely to slow in 2025 amid inflationary pressures, moderating demand: Moody’s

India’s economy is closed in 2025, mainly due to permanent inflationary pressures and domestic demand, Moody’s in its latest report. The Indian Reserve Bank (RBI) is caught in Trilema, it is necessary to balance the growth, inflation and currency stability. Since higher interest rates continue, they are expected to promote private consumption and implementation in the initial months of the year. Market viewers expect a possible relief of monetary policy since April 2025. Rupee has sharply weakened, reaching since January 2025 compared to 86.6 in the US dollar.

Moody’s analysis noted that the growth of India’s GDP has already been signed of slowing signs, of September 2024, 6.4% of the previous year, 6.7% last year. This decline indicates the weakest index at the end of 2022, mainly due to persistently high inflation and increased interest rates, which have decreased domestic demand.

Moreover, in front of the total elections in 2024, expanding the unexpected heavy rain and the government’s expenses, the economic momentum slowly slowed out. The union’s budget, which will be presented on February 1, 2025, the fiscal year, which ends on March 1, 2026, will focus on the promotion of domestic demand and reduction of fiscal deficiency. Analysts expect that the budget will present the investment by keeping the fiscal wisdom. The government aims to the end of the fiscal year less than 4.5% of the lack of fiscal year, down 5.5 of the previous year. This focus on domestic demand is very important, given the challenges of possible US dollar restrictions, which can further tighten the export environment.

The inflation of the title ended in 2024, above the RBI’s target range, complicating the decisions of the Central Bank’s monetary policy. The careful approach to RBI has seen that the main policy level remains 6.5 percent for almost two years. Although in December 2024, 2024, the interest rate cuts are conditioned by the capacity of the title, which is planned to be cooled to 4.7%.

In October, the transition to RBI in a neutral position and further relief of ceilings of interest rates on some deposits is part of the impaired rupees.

Looking at India’s economic prospects remains difficult, as in 2025 aims to achieve GDP growth in 2025.