Moody’s cuts India’s 2025 GDP growth forecast to 6.3% amidst Trump’s trade tariff uncertainty

Moody’sScores has diminished India’s GDP growth forecast for 2025 to 6.3% from 6.5%, attributing the revision to heightened international coverage uncertainty and trade limitations. The company has additionally highlighted that rising geopolitical friction between India and Pakistan presents attainable dangers to this outlook.On April 22, a terror assault in Pahalgam, Jammu & Kashmir, resulted in 26 vacationer killings.
Moody’s has maintained its growth prediction for India at 6.5% for 2026, following a projected 6.7% growth in 2024.
The Global Macro Outlook 2025-26 (May Update) by Moody’s signifies a widespread international financial deceleration influenced by elevated US coverage uncertainty, trade conflicts and unstable monetary markets. The organisation noticed that worldwide traders and companies are adjusting their approaches due to evolving geopolitical circumstances, doubtlessly rising operational prices and affecting funding choices.
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Geopolitical challenges, particularly in South Asia, are growing into attainable impediments to India’s financial development. The newest escalation in India-Pakistan relations has turn into a further concern for Moody’s evaluation.
The ranking company anticipates that the RBI will implement extra reductions to benchmark coverage charges in 2025 to bolster home financial growth.
In its international outlook, Moody’s has revised downwards its US GDP growth forecast to 1% for 2025 (diminished from 2%) and 1.5% for 2026. Similarly, China’s financial enlargement is predicted to gradual to 3.8% in 2025 and three.9% in 2026, down from 5% in 2024.
“Economic growth was already set to slow this year back to its potential rate,” Moody’s stated. “We lowered our global growth projections for 2025 and 2026 further on account of the policy shifts and more intense policy uncertainty than we had previously expected, especially in the largest two economies, the US and China.”
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Despite potential tariff reductions, the company cautions that coverage uncertainties and chronic trade disagreements, notably between the US and China, are seemingly to have an effect on international trade and funding, with implications for G-20 nations, together with India.
Additional threat elements embody ongoing conflicts in Ukraine and the Middle East, heightened South China Sea tensions, and instability in monetary markets. Moody’s signifies these elements may prohibit liquidity availability and enhance capital bills, doubtlessly destabilising financial situations additional.