India and China will see softer growth in 2025, relative to their economies’ 2024 performance, with the U.S. trade policy posing material risks for the Asia Pacific region even though India and some Southeast Asian economies could see some gains from strains in U.S-China economic ties, Moody’s Ratings said on Wednesday.
India’s fiscal conditions will continue to constrain its credit strength this year, the rating major reckoned, as fiscal consolidation in India is likely to be gradual with the government having committed funding to job creation and enhancing social welfare programs.
“We expect only gradual fiscal consolidation, and debt to remain significantly higher than the Baa-rated peer median of around 57%. Despite gains in revenue in recent years, we also expect debt affordability to remain much weaker than rated peers,” the agency said about India in its 2025 outlook for Asia-Pacific sovereigns.
Geopolitical risk will also add to fiscal pressures, Moody’s said, stating India’s “defense spending will grow rapidly amid tensions with China and Pakistan.”
Published – January 15, 2025 08:52 pm IST
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