Moody’s projects India’s economy to grow at 7% in 2028, compared with China’s 4%, citing strong domestic consumption and improving investments in India, while weak demand and property sector troubles weigh on China’s growth.
India is expected to significantly widen its economic growth lead over China over the next three years, with the gap projected to reach 3 percentage points by 2028, according to Moody’s Ratings.
In its Global Macro Outlook 2027-28 report, the ratings agency projected India’s GDP growth at 7 per cent in 2028, compared with 4 per cent for China, highlighting diverging growth trajectories between the two Asian economies.
Moody’s expects India’s economy to sustain growth of around 7 per cent annually in FY2027, supported by resilient consumption, improving investment conditions and strong macroeconomic fundamentals.
China, meanwhile, is projected to witness a gradual slowdown, with its economic growth moderating from 4.5 per cent in 2026 to 4.2 per cent in 2027 and further to 4 per cent in 2028.
“China’s economy has been on a decelerating growth path for many years. We expect growth to moderate further to 4.0 per cent in 2028 from 4.5 per cent in 2026,” Moody’s said.
The growth differential between the two economies is expected to widen from 2.5 percentage points in 2026 to 3 percentage points by 2028.
Why is India’s economy outperforming China?
Moody’s attributed India’s stronger growth outlook to robust domestic consumption, improving investment dynamics and resilient macroeconomic fundamentals.
The agency also raised its growth forecast for India in 2026-27 to 7 per cent from its earlier estimate of 6.5 per cent, citing the economy’s ability to withstand the global energy price shock and improving investment conditions.
More from BusinessAccording to Moody’s, a sustained recovery in private investment could further strengthen India’s manufacturing sector, generate employment and improve productivity, potentially pushing economic growth above current projections.
China’s growth faces mounting challenges
In contrast, China’s economic outlook remains under pressure due to weak domestic demand, prolonged troubles in its property sector and increasing dependence on exports.
The report highlighted that China’s retail sales grew by just 1.1 per cent in September, while real estate investment contracted 20.6 per cent during the first nine months of 2026.
“China’s domestic demand weakness is entrenched and unlikely to reverse quickly without strong demand-focused stimulus,” the agency said.
Although exports of technology products, automobiles and green energy equipment continue to support China’s economic growth, weak consumer spending and the prolonged property market downturn remain significant challenges.
What are the risks to India’s growth outlook?
Despite its positive medium-term outlook, India is not entirely insulated from economic risks.
Moody’s cautioned that rising inflation, higher interest rates and weaker agricultural output could weigh on economic growth in the near term.
However, strong consumption, improving investment conditions and resilient macroeconomic fundamentals are expected to keep India on a stronger growth trajectory than China over the coming years.
