Moody’s ratings suggests on Wednesday that India’s credit strength will remain constrained due to poor fiscal policies , irrespective of economic tension between US and China benefiting the Indian economy.
According to the economists, domestic spending coupled with a modest improvement in global financial conditions is aiding in prevating growth and inflation from falling even further, as noted in the APAC Sovereigns Moos Ratings report.
However, these proposed trade restrictions would severely damage India’s economic output.
“In 2025, India’s credit strength will reduced partly due to the implemented poilicies. Combined with higher than expected economic output, it is advised that a slow debt to GDP consolidation plan is put in place, preventing an significant difference from Baa economies of around 57 percent" ” Moody’s said.
“ Our estimate suggest goes against the trend where debt in India stays affordable unlike in other Peer economies,” it added.
The economy along with the fiscal is at risk of politics and civil wars. Given the severity of the tensions between the US and China, as well as regional hotspots, geopolitical uncertainties are going to continue to affect the APAC region in 2025.
Tensions between the US and China will make the chances of military violence between Taiwan and Korea to be minimal to none, but economic worries that may stem from these tensions will always remain.
“Such frictions are increasingly affecting commerce and capitalisation patterns and may further be paralleled with the US restricting funds in certain selective domains, thus pulling down the Chinese economy and hindering regional progress. That said, this transition can be of aid to the Indian and Southeast Asian markets” Confirms Moody’s.
Several global political and local electoral risks continue to be recognised, however, India rates Modi’s post-election government on policy delivery realistically believing that repaying promises is not of value to a country steeped in fiscal reform.
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