Moody’s Revises India’s 2025 GDP Growth Forecast Down to 6.3%.
Economy Business
In May 2025, Moody’s Ratings, headquartered in New York, United States of America (USA) and formerly known as Moody’s Investors Service, released the May update of its Global Macro Outlook 2025-26. In this report, the agency revised India’s Gross Domestic Product (GDP) growth forecast for 2025 downward to 6.3%, reduced from its earlier estimate of 6.5%.
- This downward revision reflects ongoing concerns about global economic instability, including increased policy uncertainty in the USA, rising trade restrictions, and intensifying geopolitical tensions—particularly between India and Pakistan.
- Moody’s has, however, retained its GDP growth forecast for 2026 at 6.5%, following an estimated economic expansion of 6.7% in 2024.
- In its May 2025 Global Macro Outlook 2025-26 update, Moody’s Ratings cut the global GDP growth forecast to 1.9% for 2025 and 2.3% for 2026, citing rising policy uncertainty, trade tensions, and geopolitical risks.
Main Point :- (i) Despite some reduction in tariffs, persistent trade frictions—particularly between the United States and China—are expected to hamper international trade and investment flows. This will likely affect the broader G-20 economies, many of which depend heavily on stable global trade dynamics.
(ii) Moody’s also flagged additional risk factors contributing to the global slowdown. These include ongoing conflicts in Ukraine and the Middle East, growing tensions in the South China Sea, and instability across global financial markets. Such risks are expected to strain investor confidence and threaten global economic stability.
(iii) Furthermore, Moody’s warns that these adverse conditions could limit the availability of liquidity and drive up capital costs, thereby worsening the financial environment. In India’s case, the agency anticipates that the Reserve Bank of India (RBI) may opt for further reductions in benchmark policy rates in 2025 to stimulate domestic economic growth amidst the global headwinds.
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