Economy - Reports
29-Sep-2025 15:35
India will remain the fastest growing G20 economy; US imposition of high tariffs to have limited negative effects, says Moody
India's credit profile benefits from its strong growth potential, underpinned by a large domestic market and favorable demographics that have historically supported resilient, demand-driven expansion and helped insulate the economy from external shocks, Moody's ratings noted while affirming the Government of India's long-term local and foreign-currency issuer ratings and the local-currency senior unsecured rating at Baa3.
Even as real GDP growth moderated in the fiscal year ended March 2025 (fiscal 2024-25) to 6.5% from 9.2% in fiscal 2023-24, India has been and will remain the fastest growing G20 economy through at least the next two to three years, it noted. We project economic growth to be sustained at 6.5% in fiscal 2025-26 as the government's continued emphasis on capital expenditure, lower inflation and the consequent easing of monetary policy will support robust domestic consumption and investment.
The US' imposition of high tariffs (currently at 50% compared to 15'20% tariff rates applied to other APAC countries) will have limited negative effects on India's economic growth in the near term, the agency stated although it may constrain potential growth over the medium to long term by hindering India's ambitions to develop a higher value-added export manufacturing sector. Moreover, the agency noted that other US policy shifts, including those related to new applications for skilled worker visas and potential levies on US businesses that outsource operations offshore is not expected to significantly weigh on workers' remittances or India's services exports. Consequently, risks of a significant widening of India's current account deficits will remain limited, it noted.
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