The global economy is expected to grow at 2.5 per cent in 2026 and 2.8 per cent in 2027—both short of the over-3-per cent growth the world is capable of, while India will be the fastest-growing major economy in both years even as it “will lose a step, too” amid softer growth elsewhere, Moody’s Analytics said.
Risks to the forecast tilt firmly to the downside, with geopolitics topping the concerns.
Moody’s Ratings had lowered its 2026 growth forecast for India to 6 per cent in May from 6.8 per cent earlier.
“Geopolitical upheaval and trade disruptions, from the Middle East conflict to friction between the US and its trading partners, have driven up prices and the cost of doing business,” it highlighted.
The result is a K-shaped world economy in which some countries and industries advance while others fall behind, the report noted.
“Even if commodity flows eventually return to something like their pre-conflict norms, the economic damage is done,” it observed.
“Rate hikes will not reopen the Strait of Hormuz,” it remarked.
Moody’s Analytics said risks to the forecast tilt firmly to the downside, with geopolitics at the top of its list of concerns. A fresh flare-up in the Middle East, or a prolonged disruption to commodity flows through the Strait of Hormuz, would push oil prices well above the baseline, lifting inflation and hurting growth.
“Such a shock would sharpen the trade-offs facing central banks—cut rates to support the real economy and risk faster inflation, or raise rates to curb inflation and inflict more damage on growth,” the organisation added.
Fibre2Fashion News Desk (DS)
