Moody’s cuts India’s 2025 growth forecast to 6.3% amid US trade uncertainty, tensions with Pakistan

Global ratings agency Moody’s on Tuesday cut India’s economic growth estimate for the current fiscal year to 6.3%, down from 6.7% in 2024, citing trade uncertainties driven by the United States and heightened geopolitical tension with Pakistan, Moneycontrol reported.

“Uncertainty surrounding global economic policies is likely to take a toll on consumer, business and financial activity,” the ratings agency said in its Global Macro Outlook’s May update.

“Geopolitical stresses are another potential downside risk to our baseline forecasts,” it added, pointing toward tensions between India and Pakistan, China and the Philippines, the continuing war between Russia and Ukraine, and Israel’s offensive on Gaza.

Tensions between India and Pakistan have increased after the Pahalgam terror attack.

The attack at the Baisaran area near the town of Pahalgam on April 22 left 26 persons dead and 17 injured. The terrorists targeted tourists after asking their names to ascertain their religion, the police said. All but three of those killed were Hindu.

Moody’s also highlighted that the escalating tensions between India and Pakistan will take a toll on Islamabad’s access to external financing, Business Standard reported.

“Sustained escalation in tensions with India would likely weigh on Pakistan's growth and hamper the government's ongoing fiscal consolidation, setting back Pakistan's progress in achieving macroeconomic stability,” Moody’s was quoted as saying by NDTV.

“A persistent increase in tensions could also...

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