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India's economy is expected to show resilience despite trade tensions arising from US President Donald Trump's tariff threats, according to a report by S&P Global.
The report highlighted that economies with a significant share of service exports, such as India and the Philippines, will be less affected by tariff measures, which are primarily imposed on goods. It said "As tariffs tend to be levied on goods, trade will be more resilient in economies where a substantial share of exports is of services. This is the case for the Philippines and, especially, India". The report noted that while trade frictions led by the US will impact economies across the Asia-Pacific region, domestic demand is expected to remain strong. As a result, any downward revisions to GDP forecasts in the region will likely be modest. The report further noted that economic growth in the Asia-Pacific region remained stable through the end of 2024, with GDP gains in the fourth quarter surpassing expectations in several countries, including India, Australia, Japan, the Philippines, Singapore, Taiwan, and Vietnam. However, growth was weaker than expected in Malaysia, South Korea, and Thailand. For India, S&P Global forecasts a GDP growth rate of 6.5 per cent for the fiscal year ending March 31, 2026. This is the same as the previous fiscal year's growth but lower than an earlier projection of 6.7 per cent. The forecast assumes a normal monsoon season and stable commodity prices, particularly crude oil. According to the report, several factors will support India's economic growth. Cooling food inflation, tax benefits announced in the Union Budget for the upcoming fiscal year, and lower borrowing costs are expected to boost consumer spending. These factors will help sustain domestic demand and cushion the impact of external trade challenges. It said "This assumes the upcoming monsoon season will be normal and that commodity--especially crude--prices will be soft". While global trade uncertainties persist, India's strong services sector and steady domestic demand are likely to keep the economy on a stable growth path. (ANI)
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