Moody’s says India best placed to weather future global shocks

India has emerged as the most resilient large emerging market economy since 2020 and is well positioned to withstand future global shocks, according to a report by Moody's Ratings.The global ratings agency said India’s strong macroeconomic fundamentals, sizeable foreign exchange reserves, and credible policy frameworks have helped it navigate multiple episodes of global volatility over the past five years. These factors, it noted, have also reinforced investor confidence and contained currency fluctuations during periods of stress.“India is better placed among emerging market sovereigns to manage future global shocks,” Moody’s said, highlighting that the country would enter any new phase of stress with strong and accessible buffers.
The report emphasised that India benefits from clear and predictable monetary policy frameworks, well-anchored inflation expectations, and flexible exchange rates that can adjust to external pressures. It also pointed to the country’s reliance on domestic funding, supported by deep local financial markets and robust reserve buffers.However, Moody’s flagged that India’s relatively high public debt and weak fiscal balance could constrain its ability to respond aggressively to successive shocks. “These factors limit the policy space available in times of prolonged stress,” it added.
The assessment comes as part of a broader analysis of major emerging market economies including Indonesia, Mexico, Malaysia, Thailand, Brazil, South Africa, Nigeria, Turkey, and Argentina.Moody’s noted that several emerging markets, including India, have demonstrated resilience by maintaining stable funding costs and uninterrupted market access despite heightened global uncertainty. This reflects sustained improvements in policy frameworks and the buildup of financial buffers, along with supportive global conditions.
The agency evaluated performance across four major stress episodes: the onset of the COVID-19 pandemic in early 2020, the global inflation surge and tightening cycle led by the U.S. Federal Reserve in 2022, regional banking stress in the United States in early 2023, and renewed tariff tensions in 2025.“These episodes typically trigger exchange-rate pressures, tighter funding conditions, and refinancing risks for emerging markets,” Moody’s said, adding that relatively accommodative external conditions helped economies absorb successive shocks.The report underscores India’s growing economic resilience and policy credibility, even as it highlights the need for continued fiscal consolidation to strengthen its ability to respond to future global disruptions.

(Business Correspondent)