Moody’s Investors Service on Thursday retained India’s economic growth forecast for 2023 at 6.7 per cent and said a strong domestic demand will possibly sustain the growth in the near term.

With exports remaining weak against an unfavourable global economic backdrop, Moody’s in its Global Macroeconomic Outlook 2024-25 said sustained domestic demand growth is propelling India’s economy.

“We expect India’s real GDP to grow about 6.7 per cent in 2023, 6.1 per cent in 2024 and 6.3 per cent in 2025,” Moody’s said.

India’s real GDP rose 7.8 per cent year-on-year in the June quarter, up from 6.1 per cent in the March quarter and was bolstered by a 6 per cent increase in household consumption and solid capital expenditure and service sector activity.

India’s growth momentum remains strong and we expect the economy to grow 6.7 per cent in 2023, as it did in 2022, it said.

Moody’s said high-frequency indicators show that the economy’s strong June quarter momentum carried into July-September as well.

“Robust goods and services tax collections, surging auto sales, rising consumer optimism and double-digit credit growth suggest urban consumption demand will likely remain resilient amid the ongoing festive season.

“However, rural demand, which has shown nascent signs of improvement, remains vulnerable to uneven monsoons that could lower crop yields and farm income,” Moody’s said.

On the supply side, expanding manufacturing and services PMI activity and healthy core industries’ output growth add to evidence of solid economic momentum, it said.

“With exports remaining weak amid an unfavourable global economic backdrop, strong domestic demand will likely sustain growth in the near term,” it said.