India's GDP growth projected at 6.5% through 2027
What's the story
India's economy is projected to grow at an average rate of 6.5% until 2027, according to a recent report by Moody's Ratings. The growth will be driven by strong infrastructure spending and resilient household consumption, the agency said in its latest Global Macro Outlook. It maintained its GDP growth forecast for India at 7% for 2025, followed by 6.4% in 2026 and another slight increase to 6.5% in 2027.
Growth drivers
Slow private sector capital spending
Moody's attributes India's sustained economic growth to stable domestic demand and ongoing export diversification. The agency said, "We expect Brazil and India, the fastest-growing G20 economies, will grow at 2% and 6.5%, respectively, through 2027, supported by domestic and export diversification." However, despite these positive indicators, private sector capital spending has been slow as corporates remain cautious about large expansions.
Trade resilience
Trade challenges and inflation outlook
The report also highlights India's ability to navigate trade challenges amid rising frictions. Despite facing 50% US tariffs on certain goods, Indian exporters managed a 6.75% growth in overall shipments in September. This was despite nearly a 12% decline in exports to the US. On the inflation front, Moody's projects growth at 2.8% for 2025, rising to 3.5% next year and hitting 4% by 2027.
Risk factors
Global risks to emerging market growth
Despite the positive growth outlook for India and other emerging markets, Moody's has warned that global trade realignments and geopolitical tensions could threaten this momentum. The firm said, "Geopolitical tensions, trade disruptions and political instability are amplifying uncertainty." It also cautioned that diverging monetary policies and fragile bond markets could worsen financial turbulence.