India’s Economy to Grow at 6.5% Through FY27 Amid Trump Tariffs, Moody’s Report Shows

India’s economic growth momentum will remain strong, supported by robust infrastructure investment, resilient consumer demand, and export diversification, even as private sector spending remains cautious, Moody’s said in its latest outlook.

The agency noted that India’s economic performance has stayed resilient amid global headwinds and new US tariffs on certain exports. Indian exporters have redirected shipments to alternative markets, helping overall exports rise 6.75% in September despite a decline in exports to the US.

Easing Inflation and Monetary Policy Cycle

Moody’s attributed India’s macroeconomic stability to a neutral-to-easy monetary policy stance and easing inflation, which have created favourable domestic conditions for growth.

“In India, the RBI held its repo rate steady in October, showing that it remains cautious on policy with inflation subdued and growth strong,” the report said.

The agency added that strong international capital inflows—driven by positive investor sentiment—have helped India absorb external shocks and maintain liquidity. However, it emphasised that the private sector has yet to fully regain confidence for large-scale business investment.

Global Growth

Moody’s expects advanced economies to grow around 1.5%, while emerging markets may expand nearly 4%. The global growth outlook remains mixed due to policy divergence, shifting trade flows, and geopolitical tensions, with many economies still recovering from post-pandemic stresses.

China’s economy is projected to grow at 5% in 2025, supported by government stimulus and strong exports, even as domestic conditions remain weak due to uneven consumption, subdued corporate lending, and contracting fixed asset investment. Moody’s expects China’s GDP growth to gradually slow to 4.2% by 2027.

In Europe, growth is expected to pick up modestly, supported by employment gains, wage stability, and monetary policy easing by the European Central Bank. Investments in infrastructure, green technology, and Germany’s fiscal push in defence and public projects are also likely to support regional growth.

In contrast, the US economy is expected to expand at a slower pace but maintain stable momentum, supported by modest consumer spending and investment linked to artificial intelligence (AI) adoption. Fiscal stimulus, a more accommodative monetary policy stance, and regulatory easing could extend the US credit cycle into 2026, offsetting some impacts of tariff and immigration policies.