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

India will continue to hold its position as the fastest-growing economy among the G20 nations, with growth projected at 6.5 per cent through 2027, according to Moody’s latest Global Macro Outlook Report for 2026–27.

The rating agency said that despite higher tariffs imposed by the Donald Trump administration in the US, India’s economic momentum remains resilient. Moody’s attributed the growth to robust infrastructure investment, strong domestic consumption, and ongoing export diversification efforts.

Indian exporters adapt to US tariffs

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“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.

It added that the Reserve Bank of India’s cautious monetary policy has supported stable growth. "In India, the RBI held its repo rate steady in October, showing that it is cautious on policy with inflation subdued and growth strong," Moody’s said.

Also Read: IMF raises India's GDP growth forecast; estimated to be 6.6% in FY26

The report noted that strong international capital inflows and positive investor sentiment have cushioned India from external shocks, helping maintain market liquidity. However, Moody’s cautioned that while domestic demand remains the key driver, private sector investment has yet to fully regain its pre-pandemic momentum.

Global growth outlook

Globally, Moody’s expects growth to remain steady but subdued, with advanced economies expanding by about 1.5 per cent, and emerging markets by around 4 per cent. It projects global GDP growth between 2.5 and 2.6 per cent for 2026 and 2027.

The United States, the report said, is seeing “slower but stable momentum” supported by modest consumer spending and AI-driven investments. Fiscal stimulus, easier monetary policy, and regulatory easing may extend the US credit cycle into 2026, offsetting tariff and immigration headwinds, though Moody’s warned of potential risks as the cycle matures.

Also Read: India’s growth story reaffirmed as IMF upgrades GDP forecast to 6.6%: Piyush Goyal

Europe and China outlook

For Europe, the report highlighted a modest recovery led by job gains, wage stability, and monetary policy easing by the European Central Bank. Germany’s increased spending on defence and green infrastructure is also expected to boost regional growth.

Meanwhile, China’s growth rate is projected to decline from 5 per cent in 2025 to 4.2 per cent by 2027, reflecting the structural slowdown in its economy and weaker global demand.