India Defies Global Slowdown, GDP Growth Set to Rise

While the world grapples with economic uncertainty, with the U.S. and Europe fearing recession and stock markets witnessing sharp declines, India stands out as an exception. Global credit rating agency Moody’s has expressed confidence in India’s economic growth, forecasting a strong performance in the coming years.

According to Moody’s, India’s GDP growth is expected to exceed 6.5% in the 2026 financial year, an improvement from 6.3% projected for 2025. This growth is attributed to increased government capital expenditure, tax relief, and lower interest rates. The report highlights that India is well-positioned to recover from cyclical slowdowns, with fiscal policies aimed at boosting consumer spending and overall economic expansion.

Stable Banking Outlook and Inflation Trends

Moody’s has maintained a stable outlook for India’s banking sector, though some pressure is anticipated in microfinance and small business loans. Despite this, banks are expected to retain adequate profitability, even with a slight dip in net interest margins.

On inflation, Moody’s projects that India’s average inflation rate will decline to 4.5% by 2026, down from 4.8% in the previous fiscal year. The Reserve Bank of India (RBI) has recently cut policy rates by 25 basis points to 6.25%, though further reductions will depend on global financial conditions and currency stability.

India’s economic resilience amid global slowdown reinforces its potential as a key growth engine, signaling a strong future for the country’s financial landscape.