Moody’s affirms India’s economic resilience despite Trump tariffs and Pakistan tensions

NOOR MOHMMED

23/May/2025

Moody’s Ratings highlights India’s strong economic resilience against potential US tariffs and rising Pakistan tensions.
Low export contribution to GDP may help India avoid severe economic fallout from US tariff hikes, Moody’s says.
India is well-positioned to manage geopolitical risks and trade uncertainties without significant impact on growth.

On May 19, 2025, Moody’s Ratings portrayed a positive outlook on India’s economy, emphasizing its resilience in the face of potential US tariffs under the Trump administration and heightened geopolitical tensions with Pakistan. Despite concerns over global trade disruptions and regional instability, Moody’s highlighted that India remains well-positioned to navigate these challenges with minimal economic impact.

One key factor underpinning this resilience is India’s relatively low export contribution to its GDP. Traditionally viewed as a weakness, this characteristic could now serve as a buffer, limiting the exposure of the Indian economy to adverse effects from increased tariffs imposed by the United States. Since India’s exports form a smaller portion of the overall economy compared to many other countries, the blow from tariffs may be less severe.

Furthermore, Moody’s assessed that the ongoing tensions with Pakistan, a frequent concern for regional stability, are unlikely to trigger any significant economic fallout. This suggests that India’s robust domestic market, diversified economy, and strong fundamentals provide a stable foundation to absorb external shocks.

Moody’s positive stance adds to the growing narrative that India’s economy is evolving towards greater resilience amid a complex global environment. Policymakers and investors can take comfort in this assessment as India continues to pursue growth and development despite external uncertainties.

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Moody’s affirms India’s economic resilience despite Trump tariffs and Pakistan tensions

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