India to grow at 7% in 2025: Moody's credits infra spending, household savings

India’s economy is set to remain one of the fastest-growing globally, driven by robust infrastructure spending and resilient household consumption, according to Moody’s Ratings in its latest Global Macro Outlook.

The agency retained its 2025 GDP growth forecast at 7%, followed by 6.4% in 2026 and 6.5% in 2027, highlighting stable domestic demand and ongoing export diversification as key drivers of growth.

“We expect Brazil and India — the fastest-growing G20 economies — will grow at 2% and 6.5%, respectively, through 2027, supported by domestic and export diversification,” Moody’s noted.

While infrastructure investments and steady consumption remain key growth drivers, Moody’s highlighted that private sector capital spending continues to lag, with corporates cautious about large expansions despite strong macro indicators.

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“India’s economic growth is supported by robust infrastructure spending and solid consumption, although the private sector remains cautious about business capital spending,” the report said.

The ratings agency also pointed to India’s success in redirecting exports amid heightened trade frictions, noting that Indian exporters grew overall shipments by 6.75% in September, despite exports to the US falling nearly 12% due to 50% tariffs on some goods.

On the inflation front, Moody’s forecast 2.8% growth in 2025, 3.5% in 2026, and 4% in 2027, highlighting that India’s inflation fell to a record low of 0.25% in October due to easing food prices and GST cuts.

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Globally, the agency expects G20 growth of 2.5–2.6% in 2026–27, with emerging markets expanding around 4% on average, outpacing advanced economies projected to grow around 1.5%.

However, Moody’s cautioned that global trade realignments and geopolitical tensions could pose risks to growth momentum.

“Geopolitical tensions, trade disruptions and political instability are amplifying uncertainty. Diverging monetary policies and fragile bond markets, prone to bouts of intense volatility, may exacerbate financial turbulence. Rapid technological advances offer productivity gains and transformative impacts across industries even as they render certain sectors and occupations obsolete,” the report said.

With inputs from agencies