Moody's Corporation headquarters in Manhattan, New York.
Credit: Reuters File Photo
New Delhi: Moody’s Ratings on Tuesday lowered India’s economic growth projection for 2025 to 6.3% from its earlier forecast of 6.5%, citing risks to the economy from India-Pakistan tensions and the US tariff policy uncertainty.
In its May update of the Global Macro Outlook, the rating agency noted that despite a pause and reduction in some tariffs, policy uncertainty and trade tensions, especially between the US and China, are likely to dampen global trade and investment with consequences across the G-20 member countries.
“Uncertainty surrounding global economic policies is likely to take a toll on consumer, business and financial activity," it said.
For the calendar year 2026, Moody’s has kept its projection on India’s economic growth unchanged at 6.5%. As per Moody’s, India’s gross domestic product (GDP) growth stood at 6.7% in 2024.
Major organisations including the World Bank and the International Monetary Fund (IMF) have also lowered India’s growth projections recently. The IMF lowered India’s GDP growth projection for the financial year 2025-26 to 6.2% from 6.5%. Last month, the Reserve Bank of India (RBI) lowered its India GDP growth forecast to 6.5% from 6.7%, citing global trade and policy uncertainties.
According to Moody’s, geopolitical challenges, specifically in South Asia, are developing into possible impediments to growth. “Costs to investors and businesses are likely to rise as they factor for new geopolitical configurations when deciding where to invest, expand and/or source goods,” the rating agency said.
While the rating agency lowered its US economic growth forecast for 2025 to 1% from 2%, it underlined that the world’s largest economy would avoid recession despite disruptive trade policies of the Trump administration.
China’s GDP growth projection has been cut to 3.8% for 2025 from 5% recorded in 2024.