India is poised to outpace all major emerging markets and Asia-Pacific (APAC) economies in GDP growth over the next two years, according to a recent report by Moody's Ratings. The agency projects a 7% GDP expansion for India in 2025, followed by 6.4% in 2026, positioning the country as a leader in regional economic growth.
Moody's attributes India's strong economic performance to robust domestic growth drivers that have remained resilient despite global volatility. These drivers include infrastructure development, strong consumption demand, and investment. The agency highlights that India's economic resilience is underpinned by these solid internal factors.
In contrast to India's strong growth, Moody's expects average GDP growth in the broader Asia-Pacific region to remain steady at 3.4% in 2026. This is only slightly higher than the 3.3% growth recorded in 2024 and the estimated 3.6% for 2025. Emerging markets within APAC are expected to be the primary drivers of regional expansion, with an average growth rate of 5.6%, significantly exceeding the 1.3% projected for advanced economies in the region. India's performance will stand out against the APAC average.
While the Indian rupee has weakened against the US dollar, Moody's notes that most rated Indian companies have implemented effective currency risk management strategies or possess strong financial buffers. Furthermore, investment-grade corporations have maintained access to international capital markets. These factors have helped to minimize the impact of currency fluctuations on Indian businesses.
The International Monetary Fund (IMF) has also projected a strong growth rate for India, estimating 6.6% for the fiscal year 2025-26. The IMF's analysis points to the stabilizing impact of the Goods and Services Tax (GST) reforms as a key factor cushioning the Indian economy from external shocks. Streamlining GST compliance, broadening the tax base, and improving coordination between the central and state governments have strengthened India's fiscal position, enabling the country to withstand trade-related setbacks and sustain internal growth. The IMF also emphasized that continued structural reforms, including labor market flexibility, ease of doing business improvements, land acquisition reforms, and investments in education, health, and skills development, are crucial for India's transition to an advanced economy.
Moody's assessment reinforces India's position as a key engine of economic momentum in an uncertain global environment. The agency's projections suggest that India's strong domestic fundamentals and proactive risk management strategies will enable it to continue leading growth in the emerging markets and APAC region in the coming years.
