FILE PHOTO: Signage is seen outside the Moody's Corporation headquarters in Manhattan, New York, U.S., November 12, 2021.
Credit: REUTERS
New Delhi: India is expected to remain the fastest growing economy among the G20 nations with real GDP growth of 7% in the current year, followed by 6.4% in 2026 and 6.5% in 2027, on the back of robust government spending, export diversification and strong consumer demands, Moody’s Ratings has said.
In its latest Global Macro Outlook report, the rating agency said that the steep 50% tariffs imposed by US President Donald Trump administration is unlikely to have any major impact on the Indian economy as most exporters appear to have successfully diversified their markets.
“Indian exporters, facing 50% US tariffs on some products, have succeeded in redirecting exports, its overall exports climbed 6.75% in September even as shipments to the US dropped 11.9%,” the report noted.
The high US tariffs, which include 25% reciprocal duties and additional 25% punitive tariff for India’s economic engagement with Russia, came into effect from August 27.
While strong consumption demands and infrastructure investments remain the key drivers of India’s economic growth, the rating agency underlined the sluggish capital spending by the private sector. It noted that India Inc remains cautious about large expansions despite strong macro indicators.
“We expect its (India’s) economy to continue to grow around 6.5% in 2026 and 2027, supported by a neutral-to-easy monetary policy stance amid low inflation. International capital flows because of positive international investor sentiment have buffered external shocks,” Moody’s Ratings said.
India’s economy posted a better-than-expected 7.8% expansion in April-June quarter, as per the latest official data. In the January-March 2025 quarter the gross domestic product (GDP) growth stood at 7.4%.
The Reserve Bank of India (RBI) has pegged India’s economic growth for financial year 2025-26 at 6.8%, while the ministry of finance hopes it to remain in the range of 6.3 to 6.8%. Moody’s Ratings’ 7% growth projection is for the 2025 calendar year.
Global economic growth
On the global economy, Moody’s Ratings said trade realignments and geopolitical tensions pose risks to growth momentum.
“Geopolitical tensions, trade disruptions and political instability are amplifying uncertainty. Diverging monetary policies and fragile bond markets, prone to bouts of intense volatility, may exacerbate financial turbulence,” it said.
As per the rating agency, the global economy growth is projected to remain in the range of 2.5% to 2.6% during 2026 and 2027. In the current calendar year, the global real GDP growth is projected at 2.6%, which is lower than 2.9% recorded in 2024.
In the next two years, emerging markets are projected to post growth of around 4%, sharply higher than around 1.5% expansion estimated for the advanced economies.