Global Economic Slowdown Impacts India's Growth Forecast

Moody's Ratings has adjusted India's GDP growth forecast for 2025 down to 6.3% from the previously estimated 6.5%. This revision is attributed to increasing global policy uncertainty and trade limitations, alongside rising geopolitical tensions between India and Pakistan.

Geopolitical Tensions Add to Economic Challenges

The recent terror attack in Pahalgam, Jammu & Kashmir, which resulted in the tragic loss of 26 tourists, has further complicated the geopolitical landscape, posing additional risks to India's economic outlook.

Global Macro Outlook: A Broader Economic Deceleration

Moody's Global Macro Outlook 2025-26 highlights a widespread slowdown, influenced by US policy shifts, trade conflicts, and volatile financial markets. The agency notes that international investors are recalibrating strategies in response to these evolving dynamics, potentially increasing operational costs and affecting investment flows.

Looking Ahead: RBI's Role and Global Implications

In response to these challenges, Moody's anticipates that the Reserve Bank of India (RBI) may implement further rate cuts in 2025 to stimulate domestic growth. Meanwhile, global economic forecasts for the US and China have also been revised downward, signaling a cautious outlook for the world's largest economies.

Additional Risks on the Horizon

Ongoing conflicts in Ukraine and the Middle East, along with tensions in the South China Sea, represent further potential disruptions to global economic stability, according to Moody's. These factors could exacerbate liquidity constraints and elevate capital costs, adding to the uncertainty.