India is forecast to remain the fastest-growing economy in the Asia-Pacific region in the second half of this year, according to credit rating agency Moody's Ratings on Thursday.

“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 stated in its latest report.

The report also highlighted that India, Indonesia, and the Philippines were the standout performers in terms of growth during the first half of 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,” according to the report.

Moreover, in regard to the banking sector, the report observed that the Indian banking system is optimistic due to strong economic growth and robust corporate credit quality. 

In terms of potential interest rate cuts in the Asia-Pacific (APAC) region, it noted that the timing of monetary policy normalisation will vary across countries, with central banks unlikely to act before the US Federal Reserve. As a result, rate cuts are not expected until the latter half of 2024 or early 2025, Business Standard reports.

“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 goes on to say.

Earlier this week, the World Bank reaffirmed its growth projection for India at 6.6% for the fiscal year 2025, while noting that India is expected to continue as the fastest growing among the world's largest economies, albeit with a moderated pace of expansion.