Moody's Slashes India's Growth Forecast Amid US Tariff Threats

Moody's Analytics has reduced India's GDP growth forecast for 2025 to 6.1% due to US tariff threats. The increased tariffs are projected to heavily impact India's trade, though domestic measures and interest rate cuts could alleviate some of the pressure.

Moody's Analytics has adjusted its forecast for India's GDP growth to 6.1% in 2025, down from 6.4% amid concerns over rising US tariffs. America, being a significant trading partner, poses a risk with a looming 26% import tariff on Indian goods.

The report indicates that industries such as gems and jewellery, medical devices, and textiles will be most affected. However, Moody's forecasts that India's overall growth will remain stable thanks to minimal dependency on external demand. Eased headline inflation could also prompt the Reserve Bank of India to cut interest rates, thus supporting domestic economic resilience.

In other developments, US President Donald Trump has deferred a 90-day tariff on 75 nations, offering temporary relief. Nonetheless, the impact on global economic confidence is evident, with volatile equity markets and diminished business investment prospects. Moody's warns that if uncertainties persist, expected monetary policy easing in 2025 may lose its intended effectiveness.

(With inputs from agencies.)