Moody’s Ratings has downgraded India’s economic growth outlook for the current fiscal year, citing mounting geopolitical risks linked to the ongoing conflict in the Middle East.
The agency cut its projection for India’s real GDP growth to 6%, down from an earlier estimate of 6.8%, warning that the fallout from the US-Israeli war against Iran is likely to disrupt energy markets and fuel inflationary pressures.
According to the report, India’s economic exposure to the crisis — particularly through its heavy reliance on energy imports — is expected to weigh on overall momentum, dw.com reports.
The country, the world’s fourth-largest economy and a major consumer of oil, depends significantly on supplies routed through the Strait of Hormuz, a critical chokepoint that has been effectively shut amid escalating hostilities.
Moody’s flagged multiple headwinds ahead, including subdued private consumption, weakening industrial output, and slowing investment activity, all compounded by rising input costs and elevated global prices.
The strain on energy supplies has already prompted New Delhi to prioritize household consumption, leaving less fuel available for industrial use.
As a result, several manufacturing sectors, including stainless steel and plastics, have scaled back production.
With the conflict showing no signs of easing, concerns are growing over a widening current account deficit driven by a surging energy import bill.
While inflation remains relatively contained for now, Moody’s warned that geopolitical developments have shifted risks to the upside, projecting inflation to average 4.8% in the next fiscal year, a sharp increase from 2.4% previously.
