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Growth in emerging markets outside the Gulf Cooperation Council (GCC) region will maintain a similar rate to 2026 in the coming year, driven by several large economies including India and Indonesia, according to Moody's Ratings.
In its latest report on global sovereigns for 2027, the rating agency noted that median GDP growth for all rated sovereigns will edge higher to 3.1 per cent from 2.5 per cent in 2026. While the global sovereign outlook remains stable, Moody's highlighted that India's primary fiscal balance will be sufficient to stabilise its debt-to-GDP ratio or set it on a downward path. "Outside the Gulf Cooperation Council (GCC) region, growth in emerging markets will maintain a similar rate to 2026, driven by several large economies including India and Indonesia," the report said. Regarding fiscal health, the report pointed to a divergence in global debt dynamics. While median debt across countries will remain broadly stable over the next five years, several large economies including China, the US and India (Baa3 stable) will add significantly more debt, driven by structurally higher borrowing costs," it said. Despite adding to the overall debt stock in dollar terms, India stands out among major economies for its ability to manage its debt burden relative to economic output. Unlike the US, China, and France, where fiscal improvements will fall short of stabilising debt, India joins a select group of nations maintaining stronger primary balances. "By contrast, primary balances in a number of frontier economies, Korea, India, Japan and Greece will be sufficient to stabilise or set debt to GDP on a downward path, although from high levels for the latter two," Moody's said. Looking beyond the next two years, the report projected that global government debt will remain heavily concentrated. The US and China will contribute more than half of total global government debt by the end of the decade, followed by India, Brazil, and Germany. On the technological front, Moody's observed that artificial intelligence (AI) will have varied credit effects across economies depending on their position in the value chain and capacity to absorb the technology. Over the next five to 10 years, nations with AI-ready workforces and fiscal capacity for reskilling will see the largest gains. "As adoption increases over the next five to 10 years, productivity will also improve in large emerging markets quick to adopt the technology, such as China and, to a lesser extent, India," the agency added. Overall, the report noted that sound bank, corporate, and household balance sheets, alongside effective policy responses to energy shocks and ongoing AI investment, will support steady global growth through 2027, even as sovereign resilience faces tests from higher interest rates and geopolitical risks. (ANI)
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