A 26-per cent US tariff hovering over imports from India will heavily impede the trade balance, the division of Moody’s Ratings said.
Moody’s Analytics recently revised downward its GDP forecast for India for 2025 by 30 basis points (bps) to 6.1 per cent.
A 26-per cent US tariff hovering over imports from India will heavily impede the trade balance, it noted.
It expects the overall growth of the country to be relatively insulated from the shock as external demand makes up a relatively small portion of GDP.
Acknowledging the 90-day freeze on most tariffs and the 10 per cent blanket in their place, Moody’s Analytics said that its April baseline represents the economic toll should the tariffs eventually go ahead in full.
Moody’s Analytics expects the overall growth of the country to be relatively insulated from the shock as external demand makes up a relatively small portion of GDP.
Keeping in view the ease in headline inflation, Moody’s Analytics expects the Reserve Bank of India (RBI) to lower interest rates, most likely in the form of 25 bps cuts that take the policy rate to 5.75 per cent by the end of 2025.
“This, paired with tax incentives announced earlier this year, should help boost the domestic economy and dampen the shock of the tariffs on overall growth relative to other vulnerable economies,” it stated.
However, uncertainty is palpable, with tumbling and volatile equity markets headlining financial market turbulence, it added.
Fibre2Fashion News Desk (DS)
