Moody's Forecasts India's Economic Prospects Amid Global Tensions

Moody's Ratings anticipates that India’s fiscal conditions will hinder its credit strength in 2025, though it may benefit from US-China tensions. The report highlights that domestic demand is strong, but potential US trade restrictions could impact the region’s economic output, with persistent geopolitical risks.

In a recent report, Moody's Ratings projected that India's fiscal conditions will continue to constrain its credit strength through 2025. Despite some economic gains due to US-China tensions, India's debt levels remain significantly higher than similar rated peers, posing a challenge to its credit standing.

Moody's highlighted that while growth and inflation are stabilizing, bolstered by robust domestic demand and moderate financial easing, geopolitical tensions and proposed US trade restrictions could negatively impact the region's economic performance.

The report also underscored the ongoing geopolitical risks in the Asia Pacific region, with the potential for political and social unrest posing additional economic threats. The evolving US-China relationship plays a pivotal role in shaping trade and investment flows, potentially benefiting India and Southeast Asian economies.

(With inputs from agencies.)