Trade tensions to impact growth in Asia Pacific; India’s growth to slow to 6.4% in 2025: Moody’s

Tariffs will threaten APAC growth

Trade tensions are likely to impact growth in the Asia Pacific, with India’s growth tapering to 6.4 percent in 2025 from 6.6 percent in 2024, according to Moody’s Analytics report released on February 20.

“Growth across the Asia-Pacific economy will slow in 2025 as trade tensions, policy shifts, and uneven recoveries knock the region’s fortunes. We expect GDP growth to slow to 3.7% in 2025 and 3.5% in 2026 from nearly 4% in 2024,” said Moody’s Analytics.

“Growth in India will creep into the low-6% range in coming years from 6.6% in 2024,” it further said.

Growth across the region will likely slow with new tariffs and softening global demand.

US President Donald Trump in one of his first orders imposed a 25 percent tariff on Canada and Mexico, and 10 percent on China. The tariffs on Canada and Mexico were later put on hold. The president has also imposed tariffs on steel and aluminium. The US has also imposed tariffs on semiconductors, pharmaceuticals, and automobiles.

The economies have already been trailing their pre-pandemic levels. India is 2 percent off its former trend. But India is better placed than other ASEAN group economies with GDP 5 percent off the pre-pandemic levels.

Indian economy is likely to grow at 6.4 percent in 2026 and 6.5 percent in 2027.

“Domestic demand across most APAC economies is weak, leaving the region vulnerable to a deteriorating trade environment. Without a meaningful shift towards greater reliance on homemade demand, growth will have to slow,” said Moody’s.

The Indian economy had grown over 7 percent over the last four years.