NEW DELHI, India’s fiscal conditions will continue to constrain its credit strength in 2025, though tensions US-China relations Indian economy may benefit Moody’s Ratings said Wednesday. In its report on Asia-Pacific sovereigns, Moody’s Ratings said growth and inflation are leveling off, with modest easing in global and regional financial conditions supporting strong domestic demand.
But proposed trade sanctions by the US will weaken economic output across the region.
Moody’s said, “India’s fiscal conditions will continue to constrain its credit strength in 2025. We expect only gradual fiscal consolidation, and debt to remain significantly above the rated peer median of around 57 percent. keep,” Moody’s said.
It added that “despite revenue growth in recent years, we also expect debt affordability to remain relatively low compared to rated peers. I will be very weak.”
It said politics and social unrest pose significant economic and financial risks. In APAC, geopolitical risks will persist in 2025, with tensions in US-China relations and regional hotspots swirling around.
Moody’s predicts a low probability of a military conflict in the Taiwan Strait or the Korean Peninsula, and tensions will remain high, particularly over U.S.-China relations.
“These tensions are shaping trade and investment flows, which could shift further away from China as the U.S. tightens investment in strategic sectors, further weakening China’s economy and undermining regional growth. However, this shift could benefit India and the Southeast Asian economies,” Moody’s said. said.
It said a range of geopolitical and domestic political risks persist, with elections in key economies requiring governments to choose whether to deliver on commitments or focus on fiscal consolidation.