What is Moody’s prediction for India’s GDP growth in 2025?

New Delhi, May 6 (NationPress) Moody’s Ratings announced on Tuesday that it anticipates India's GDP growth to reach 6.3 percent in 2025, with expectations for the economy to gain traction in 2026, achieving a growth rate of 6.5 percent.

This forecast aligns with the International Monetary Fund's outlook, which identifies India as the sole major economy poised for over 6 percent growth in 2025.

Moody's noted, "Uncertainty surrounding global economic policies is likely to adversely affect consumer, business, and financial activities," in the recent update of its Global Macro Outlook. The agency had previously estimated a growth rate of 6.5 percent for India.

Ongoing trade tensions, particularly between the US and China, alongside policy uncertainty, could negatively impact global trade and investment, affecting G20 nations, according to Moody’s.

Additionally, escalating geopolitical tensions are projected to hinder growth. The agency highlighted recent conflicts involving India and Pakistan, as well as China and the Philippines, in addition to the ongoing issues in Russia, Ukraine, and the Middle East.

Moody’s added, "Costs for investors and businesses are expected to rise as they consider new geopolitical dynamics when making investment and sourcing decisions."

However, the agency predicts India's inflation rate will stabilize at 4 percent in 2025, increasing slightly to 4.3 percent in 2026. This stability is expected to strengthen the country’s macroeconomic foundations, allowing the Reserve Bank of India (RBI) to reduce interest rates to stimulate growth.

Moody’s stated, "The Fed's policy trajectory is less critical for emerging market central banks than it was last year. We anticipate that the Reserve Bank of India will further decrease rates to bolster growth."

The RBI forecasts a 6.5 percent GDP growth for India in 2025-26 amid global trade and policy uncertainties resulting from US tariff increases.

RBI Governor Sanjay Malhotra recently remarked, "Uncertainty itself significantly dampens growth by influencing investment and spending decisions among businesses and households. Moreover, the impact of global growth due to trade friction will hinder domestic growth, and higher tariffs will negatively affect net exports."

He also emphasized the complexity of quantifying these adverse impacts, citing numerous variables, including tariff fluctuations and proposed policy measures such as the Foreign Trade Agreement with the USA.

Taking these factors into account, the RBI now projects real GDP growth for 2025-26 at 6.5 percent, with quarterly estimates of 6.5 percent for Q1, 6.7 percent for Q2, 6.6 percent for Q3, and 6.3 percent for Q4, according to the RBI Governor.