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Moody’s cuts India’s GDP growth forecast for 2025 on US tariff hurdle
Moody's Analytics said stiff new tariffs and tariff threats from the US prompted it to revise growth targets for many Asia-Pacific economies downward
Moody’s Analytics on Thursday cut its growth forecast for India in the current calendar year to 6.1% from its earlier projection in March in the wake of the US tariffs.
Although US President Donald Trump just declared a 90-day freeze on most of the harsh tariffs announced a week ago and applied a 10% blanket tariff in their place, the April baseline represents the “economic toll they will have should they eventually go ahead in full,” Moody’s Analytics said in a note.
“Cambodia, Laos, Vietnam, Thailand, Taiwan, India, South Korea, Japan, Indonesia and Malaysia were to be subject to new tariffs ranging from 24% to 46% from 9 April. With the exception of China, the latest policy pivot means that all are now looking at a 10% tariff for 90 days,” it added.
Moody’s current growth forecast for India is 30 basis points lower than the 6.4% rate it estimated last month. One basis point is one-hundredth of a percentage point.
“Uncertainty is palpable” as the US, one of India’s largest trading partners, paused a 26% tariff on imported Indian goods, the ratings firm said.
The big unknown is how economies affected by US tariffs might alter the extent and duration of tariffs in all directions and whether the US will extend its 90-day pause, the Moody Analytics’ report underscored.
Moody’s Analytics said stiff new tariffs and tariff threats from the US prompted it to revise growth targets for many Asia-Pacific economies downward, adding that the ‘Liberation Day’ tariffs represent the most significant increases since the 1930s.
The Moody’s note said its April baseline captures weaker growth prospects for China, Japan, Vietnam, Taiwan, India, Indonesia, South Korea, New Zealand, the Philippines, Australia, Singapore, Hong Kong and Malaysia.
Earlier this week, the Asian Development Bank (ADB) said the gross domestic product (GDP) in South Asia’s largest economy is projected to expand by 6.7% in 2025 and at 6.8% the next year, while economies in developing Asia and the Pacific are projected to grow 4.9% this year, down from 5% last year.
ADB highlighted stronger growth in South Asia and Southeast Asia, driven by domestic demand. A continued recovery in tourism elsewhere in the region will partly offset the slowdown in the People’s Republic of China.
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