Tariffs, global turbulence no match for India’s growth, Moody’s pegs growth at 6.5% through 2027

Despite global headwinds and rising US tariffs, India is set to retain its position as the fastest-growing economy among the G-20 nations, according to Moody’s Ratings’ Global Macro Outlook 2026-27 released Wednesday. The agency projects India’s GDP to expand by 6.5% annually through 2027, buoyed by infrastructure investment, strong consumer demand, and export diversification. 

Moody’s said India’s economic resilience stands out even as exporters face steep tariff barriers under former US President Donald Trump’s trade policies. “Indian exporters, facing 50% US tariffs on some products, have succeeded in redirecting exports,” the report noted, adding that overall exports rose 6.75% in September despite an 11.9% decline in shipments to the US. 

The credit rating agency attributed India’s stability to a neutral-to-easy monetary stance and low inflation, both of which have kept domestic conditions supportive of 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 observed. 

The report added that robust foreign capital inflows and positive investor sentiment have provided India with a financial cushion against external shocks, helping maintain liquidity. While domestic demand remains the main growth engine, Moody’s noted that private sector capital expenditure is still subdued, with large-scale business investments yet to fully recover. 

Globally, Moody’s projects steady but uneven growth. World GDP is expected to hover around 2.5-2.6% in 2026 and 2027, with advanced economies growing around 1.5% and emerging markets — led by India — expanding close to 4%. 

In contrast, the US economy is forecast to slow modestly but remain stable, supported by consumer spending and AI-related investments. Fiscal stimulus and a more accommodative monetary policy may extend the current credit cycle into 2026, though risks could rise as it matures. 

Europe is seeing mild recovery on the back of job gains and infrastructure spending, while China is expected to grow 5% in 2025 before slowing to 4.2% by 2027 amid weak domestic consumption and shrinking investment. 

Moody’s warned that the global outlook remains “stable but mixed,” shaped by policy divergence, geopolitical risks, and trade realignments. The report cautioned that escalating US-China tensions, tech sector volatility, and uneven policy normalization could trigger new rounds of market turbulence — even as technological advances continue to drive productivity gains.