NEW DELHI: India’s GDP growth forecast for 2025 has been revised downwards to 6.1% from the earlier 6.4%, citing the impact of the US tariffs if they are implemented fully after the 90-day freeze announced by US President Donald Trump, Moody’s Analytics said on Thursday.
But it also said that it expects overall growth to be relatively insulated from the shock since external demand makes up a relatively small portion of GDP.
“The US is one of India’s largest trading partners, so a 26% tariff hovering over imports of Indian goods will heavily impede the trade balance. Gems and jewellery, medical devices and textile industries will be among the worst hit,” the agency, which is an arm of Moody’s said in a latest report on the impact of the bruising tariffs on Asia Pacific economies.
The agency said that it expects the Reserve Bank of India to lower interest rates, most likely in the form of 25-basis point cuts that would take the policy rate to 5.75% by the end of the year. “This, paired with tax incentives announced earlier this year, should help boost the domestic economy and dampen the shock of the tariffs on overall growth relative to other vulnerable economies,” said Moody’s Analytics.
