New Delhi: Moody’s Ratings on Tuesday projected India’s GDP growth rate at 6.3 per cent in 2025 and expects the country’s economy to pick up pace and register a growth rate of 6.5 per cent in 2026.
Moody’s forecast is in line with the IMF’s outlook, which sees India as the only major economy in the world to register a growth rate of more than 6 per cent in 2025. “Uncertainty over global economic policies is likely to weigh on consumer, business and financial activity,” Moody’s said in the May update of its Global Macro Outlook.
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The rating agency had earlier projected a growth rate of 6.5 per cent for India. Moody’s said that despite US tariff cuts, policy uncertainty and US-China trade tensions could hurt global trade and investment, which could also impact G20 countries.
Apart from trade uncertainties, rising tensions are likely to weigh on growth. Geopolitical tensions are another potential downside risk to baseline forecasts, the rating agency said.
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In recent times, tensions have escalated between India and Pakistan in South Asia and China and the Philippines in the South China Sea. These countries are also now embroiled in mutual tensions, just like the unresolved wars in Russia and Ukraine, Moody’s said. “Costs to investors and businesses are likely to rise,” it said.
Moody’s expects India’s inflation rate to be 4 per cent in 2025 and 4.3 per cent in 2026, adding that the country’s macro-economic fundamentals are strong and the RBI will have more room to cut interest rates to boost growth.
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“The path of the Fed’s policy is not as important for emerging market central banks as it was this time last year. Among other emerging countries, we expect the Reserve Bank of India to lower rates further to support growth,” Moody’s said.
The RBI has projected 6.5 per cent GDP growth for India in 2025-26 amid global trade and policy uncertainties in the wake of the US tariff hike.
“First and foremost, uncertainty itself slows growth by affecting investment and spending decisions of businesses and households. Second, the impact on global growth due to trade frictions will constrain domestic growth. Third, higher tariffs will have a negative impact on net exports,” RBI governor said recently. Taking all factors into account, real GDP growth for 2025-26 is now projected at 6.5 per cent.
