November 17, 2025
The agency stated that India has absorbed US tariff shocks by diversifying its exports and redirecting shipments
Strong infrastructure spending, consumer demand, and favourable monetary conditions continue to support growth
Moody’s noted that private sector capital expenditure remains cautious despite the broader momentum.
Global growth is forecast at around 2.5 to 2.6% in 2026 and 2027, with emerging markets led by India
India is expected to withstand the tariff turbulence triggered by US President Donald Trump and remain the fastest-growing economy among G20 nations over the next two years, with growth projected at 6.5%per cent through 2027, Moody’s Ratings in its Global Macro Outlook 2026-27.
The agency stated that India’s growth momentum will be supported by substantial infrastructure investment, robust consumer demand, and diversified exports. It added that private sector capital spending remains cautious but does not undermine the broader growth trajectory. Moody’s observed that India has remained resilient in the face of global headwinds and the higher US tariffs imposed on select exports.
According to the report, Indian exporters have adapted to the 50% US tariffs on certain products by redirecting shipments to other markets. It noted that India’s overall exports rose 6.75% in September, even as shipments to the United States declined 11.9%. Moody’s attributed this resilience to a neutral to easy monetary policy stance and low inflation, which have kept domestic conditions favourable. It pointed out that the Reserve Bank of India held the repo rate steady in October, indicating that it remains cautious, given subdued inflation and strong growth.
Moody’s added that India has benefited from strong international capital inflows, fueled by positive investor sentiment, which has helped cushion external shocks and maintain liquidity. While domestic demand remains the main driver of growth, the report stated that private sector confidence has not yet fully recovered for large-scale investment.
On global growth, Moody’s projected worldwide GDP expansion of around 2.5 to 2.6% in 2026 and 2027, reflecting steady but uneven progress across regions. Advanced economies are expected to grow by about 1.5%, while emerging markets, led by India, are projected to expand by close to 4%. The report stated that policy divergence and shifts in trade patterns will shape a stable but mixed global growth environment as countries adjust to post-pandemic changes and geopolitical realignments.
In the United States, Moody’s said economic momentum remains slower but stable, supported by moderate consumer spending and investment in artificial intelligence. It noted that narrow credit spreads, strong equity markets, and ample liquidity have created supportive financial conditions. The agency stated that fiscal stimulus, more accommodative monetary policy, and regulatory easing could extend the US credit cycle into 2026, helping offset the effects of tariffs and immigration pressures. However, risks could rise as the cycle matures.
For Europe, Moody’s reported a modest improvement, driven by employment gains, wage stability, and the European Central Bank’s easing measures. It said regional growth would be supported by investments in infrastructure and green technology, including Germany’s increased spending on defence and public projects.
Regarding China, Moody’s stated that the economy is expected to grow 5% in 2025, driven by government stimulus and robust exports. It noted that domestic fundamentals remain soft, with uneven consumption, weak corporate lending, and shrinking fixed asset investment. The agency expects China’s real GDP growth to slow gradually to 4.2% by 2027.
Source: Economic Times