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India's Growth Defies US Tariffs: Why Moody's Predicts 6.5% Expansion

India is set to remain the fastest-growing major economy with 6.5% expansion through 2027. The growth momentum is supported by strong infrastructure spending and resilient domestic demand. Despite facing 50% US tariffs on some products, Indian exporters have successfully diversified their markets. The RBI's cautious monetary policy has helped maintain economic stability amid global challenges.

Key Points: India to Remain Fastest Growing G20 Economy Despite Tariffs

  • Robust infrastructure investment fuels India's economic expansion despite trade challenges
  • Strong domestic consumer demand continues driving growth as primary engine
  • Export diversification helps offset 11.9% drop in US shipments amid tariffs
  • RBI's steady monetary policy maintains stability with subdued inflation and strong growth
2 min read

India to stay fastest-growing major economy despite US tariff hikes: Moody's

Moody's projects India will maintain 6.5% growth through 2027 despite US tariffs, supported by infrastructure investment and export diversification.

"Indian exporters, facing 50 per cent US tariffs on some products, have succeeded in redirecting exports - Moody's Global Macro Outlook"

New Delhi, Nov 13

India is expected to remain the fastest-growing economy among the G20 nations with a growth rate of 6.5 per cent through 2027, despite the Donald Trump administration’s tariff hikes, according to Moody’s latest 'Global Macro Outlook report for 2026-27'.

The report states that the pace of India’s growth will be supported by robust infrastructure investment, strong domestic consumer demand, and export diversification.

“Indian exporters, facing 50 per cent US tariffs on some products, have succeeded in redirecting exports, with overall exports climbed 6.75 per cent in September even as shipments to the US dropped 11.9 per cent,” the report points out.

The report praises the RBI’s monetary policy for keeping the country on a stable growth path. "In India, the RBI held its repo rate steady in October, showing that it is cautious on policy with inflation subdued and growth strong," the report states.

The strong international capital inflows, driven by positive investor sentiment, have helped cushion external shocks and maintain liquidity, the report further states.

However, it also observes that while domestic demand remains the primary growth engine, the private sector is yet to fully regain confidence for large-scale business investments.

Global growth will likely remain steady but subdued with advanced economies growing modestly and emerging markets mostly maintaining stronger momentum, the report states. It projects global growth at around 2.5 to 2.6 per cent in 2026 and 2027, reflecting steady but uneven expansion across regions.

Advanced economies are expected to grow about 1.5 per cent while emerging markets are likely to post a 4 per cent growth.

The United States is clocking slower but stable momentum, supported by modest consumer spending and AI-related investment and adoption, the report states.

The fiscal stimulus, a more accommodative monetary policy, and regulatory easing could extend the US credit cycle into 2026, offsetting tariff and immigration pressures — though risks could rise as the cycle matures, the report added.

In the case of Europe, the report observes a modest improvement driven by employment gains, wage stability, and monetary policy easing by the European Central Bank. Investments in infrastructure and green technology, particularly Germany’s investment in defence and public projects, are expected to spur regional growth.

China’s growth rate is expected to slow down from 5 per cent in 2025 to 4.2 per cent by 2027.

- IANS

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Reader Comments

R
Rohit P
Good to see international recognition of our growth story. But I hope this growth translates to better job opportunities for youth. The private sector investment hesitation mentioned in the report is concerning.
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Arjun K
RBI deserves credit for maintaining stability. While the headline numbers look good, I wish the report had more details about how this growth benefits ordinary citizens. Infrastructure investment is great, but what about inflation control for daily essentials?
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Sarah B
As someone working in exports, I can confirm the diversification is real. We've shifted focus to Middle East and European markets. The 6.75% overall export growth despite US challenges is remarkable!
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Michael C
India's growth story continues to impress global investors. The fact that we're outperforming China's projected growth (4.2% vs our 6.5%) shows our economic policies are working well. Smart move by exporters to redirect shipments!
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Ananya R
While the numbers look good, I hope the government focuses on ensuring this growth is inclusive. Rural areas and smaller cities need to benefit equally from this economic momentum. 🏙️→🏞️

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