[Moody’s] Published on: April 15, 2025
Author: AllIndiaUSANews14.com[Moody’s]
Moody’s Lowers India’s 2025 Growth Forecast to 6.1% Amid Tariff Uncertainty
[Moody’s] Amid escalating trade tensions and a fresh round of U.S. tariffs, Moody’s Analytics has revised India’s GDP growth forecast for 2025 downward by 30 basis points, bringing it to 6.1% from its previous baseline projection made in March.
The downgrade comes in the wake of U.S. President Donald Trump’s latest trade maneuver, which saw a 90-day freeze on most of the heavy tariffs announced last week.
In their place, the U.S. administration introduced a blanket 10% tariff,
signaling potential long-term strain if harsher tariffs are fully implemented in the future.
“The April baseline represents the economic toll they will have should they eventually go ahead in full,”
Moody’s Analytics stated in its latest note.
Key Sectors Under Pressure
While the United States remains one of India’s largest trading partners, the new tariffs—peaking at 26%—are expected to hit Indian exports hard.
Moody’s identified gems and jewelry, medical devices, and textiles as some of the most vulnerable sectors to these developments.
Despite these concerns, Moody’s analysts believe India’s overall growth may stay relatively resilient,
as external demand constitutes only a small portion of India’s GDP.
RBI Reacts with Second Rate Cut, Signals Dovish Outlook
In response to the increasing economic uncertainty, the Reserve Bank of India (RBI) on Wednesday announced a second consecutive cut to its benchmark repo rate, shifting its policy stance from neutral to “accommodative.” The move indicates that more rate cuts could be on the horizon as the central bank attempts to counterbalance the trade shocks and stimulate domestic economic activity.
RBI Governor Sanjay Malhotra acknowledged the challenges posed by the tariff-driven instability:
“Tariffs have increased uncertainty, but assessing their impact on GDP is challenging,”
Malhotra said in the RBI’s monetary policy statement.
Moody’s forecasts the repo rate could fall to 5.75% by the end of 2025, giving the central bank ample space to maneuver as global trade headwinds gather force.
Tax Relief and Domestic Support May Cushion Impact
Earlier in the year, the Indian government announced a series of tax breaks aimed at boosting investment and consumption. Moody’s believes that these fiscal measures, combined with monetary easing, could help shield India’s economy from severe fallout, especially when compared to other vulnerable emerging markets.
Conclusion
While Moody’s downgrade reflects near-term risks stemming from U.S.-India trade tensions, India’s strong domestic demand base, proactive central banking, and targeted fiscal support may offer a partial buffer. Nevertheless, with tariff policies in flux and global uncertainty high, stakeholders will be watching closely as India charts its course through a turbulent trade landscape.