Moody's cuts India's GDP growth forecast to 6.3% in 2025 on US trade uncertainty

Moody's Investors Service has revised India's 2025 GDP growth forecast downward to 5.8% from 6.3%, citing global trade uncertainties and domestic demand moderation. The ratings agency highlighted reduced US and EU import demand, tighter financial conditions, and delayed private capex recovery as key growth constraints. While maintaining India's position as the fastest-growing G20 economy, Moody's noted persistent external sector vulnerabilities and fiscal consolidation challenges. The report specifically mentioned declining electronics exports and moderating services growth as concerning trends. This revision follows similar adjustments by other agencies, though the Indian government maintains its 6.5% growth projection, emphasizing strong domestic fundamentals. Moody's assessment points to potential headwinds from elevated interest rates, global commodity price volatility, and uneven monsoon impacts on rural demand. The report suggests that while infrastructure spending continues to support growth, private investment recovery remains crucial for sustaining higher growth trajectories. The forecast cut comes ahead of crucial state elections and the full Union Budget presentation, which will provide clearer policy direction for economic management in the coming fiscal year.