Moody’s forecasts India’s economy to expand by 7% in 2025 and 6.5% in 2026, it was announced on Thursday, driven by domestic demand and export diversification, alongside a neutral-to-easing monetary policy stance.

In its Global Macro Outlook, Moody’s noted that growth is underpinned by strong infrastructure investment and healthy consumer spending, although the private sector remains cautious regarding business capital expenditures.

Moody’s expects India, the fastest-growing G20 economy, to expand at 6.5% through 2027, supported by domestic demand and export diversification. Real GDP growth for the 2025 calendar year is projected at 7%, up from 6.7% in 2024.

Despite facing 50% US tariffs on certain products, Indian exporters have successfully redirected their shipments, with overall exports rising 6.75% in September, even as exports to the US fell 11.9%.

“We expect its economy to continue to grow around 6.5 % in 2026 and 2027, supported by a neutral-to-easy monetary policy stance amid low inflation,” Moody's went on to add.

Furthermore, Moody’s noted that positive international investor sentiment has helped cushion India from external shocks through sustained capital inflows. 

Regarding global growth, the agency expects it to remain steady but muted, with advanced economies expanding modestly while emerging markets generally maintain stronger momentum.

On trade, Moody’s noted that rising restrictions and uncertainty have heightened the possibility of a US-China decoupling, though other major economies may continue to deepen their trade ties. Outlooks differ significantly across G20 countries.

For China, Moody’s projects economic growth of 5% in 2025, supported by government stimulus and strong exports, with real GDP growth gradually slowing to 4.2% by 2027.

“Global real GDP growth will likely hover between 2.5 and 2.6 % in 2026 and 2027, down from 2.6 % in 2025 and 2.9 % in 2024,” Moody's said.