No major impact of Trump tariffs? Moody’s says India to be fastest growing major economy; ‘succeeded in redirecting exports’

India will continue to be the world’s fastest growing major economy in the coming years, despite its exports taking a hit after Donald Trump administration’s 50% tariffs, according to the latest global economic outlook report by Moody’s.

Ratings agency Moody has predicted that India’s economy will grow at a strong 6.5% through 2026 and 2027. “India — the fastest-growing G-20 economy — will grow at 6.5%, through 2027, supported by domestic and export diversification. India's economic growth is supported by robust infrastructure spending and solid consumption, although the private sector remains cautious about business capital spending,” Moody’s has said in its report.




Talking about the impact of US tariffs, Moody’s said that Indian exporters appear to have successfully diversified their markets. “Indian exporters, facing 50% US tariffs on some products, have succeeded in redirecting exports — its overall exports climbed 6.75% in September even as shipments to the US dropped 11.9%,” the report said.

“We expect its economy to continue to grow around 6.5% in 2026 and 2027, supported by a neutral-to-easy monetary policy stance amid low inflation. International capital flows because of positive international investor sentiment have buffered external shocks,” it added.

Global Economic Outlook: How much will US & China grow?

As per the report by Moody, advanced economies are anticipated to show modest growth, whilst emerging markets continue to demonstrate stronger performance, contributing to stable but moderate global expansion.

The global real GDP growth is projected to range between 2.5% and 2.6% during 2026 and 2027, showing a decline from 2.6% in 2025 and 2.9% in 2024.

The US economy, whilst maintaining GDP growth, shows signs of deceleration with reduced hiring and income growth, characteristic of a maturing business cycle.

“The labor market is softening but stable consumer spending and investment in artificial intelligence (AI) have supported robust GDP growth, prompting upward revisions to our 2025 and 2026 forecasts,” it said.

China's economic projections indicate a 5% growth in 2025, bolstered by government financial interventions and robust export performance, with an anticipated decline to 4.2% by 2027. Internal economic indicators show inconsistent consumer spending, reduced corporate borrowing and declining fixed asset investments.

The US effective tariff rates are anticipated to remain between 15%-20%, whilst increasing exemptions might lead to reduced import duties. Trade relations will remain uncertain with occasional minor disputes emerging.

Despite the current US-China trade equilibrium, global trade patterns will shift as nations emphasise economic security and address supply chain vulnerabilities, Moody’s said.

“For example, the Chinese export controls on rare earth minerals on its trading partners in response to US restrictions on semiconductors — even though suspended for now — suggests that the global trade environment will continue to evolve, but unpredictably. Companies and governments are likely to accelerate efforts to diversify away from Chinese rare earths, even though it will be costly and take time,” it says.

“The possibility of economic decoupling between China and the US has increased with rising trade restrictions and uncertainty, but the rest of the world continues to trade and could seek out stronger trade relationships,” it added.