India, Brazil well placed to withstand shocks, says Moody's Ratings

India and Brazil, which are large and domestically driven emerging economies, are likely to withstand some of the tumult from shifting US policies, even as most of their peers are "exposed to choppy waters" that could potentially reshape global capital flows, supply chains, trade and geopolitics, Moody's Ratings said on Tuesday. 

 

Noting that Brazil and India are more equipped than smaller peers to continue attracting capital and withstand any cross-border outflows, Moody’s said they also have deep domestic capital markets and low external vulnerability indicators. 

 

“While the large EMs have resources to navigate the turbulence, smaller open EMs are more vulnerable because they rely more on cross-border trade and investment for growth,” it added.

 

 

Although growth will remain the highest in Asia-Pacific, the region's integration in global trade means it is most exposed to US tariffs and their potential to slow growth.

 

It further added that many EMs have structured their trade models around preferential access to the US market, benefiting from long-standing tariff asymmetries. Economies that impose high tariffs on imports from the US while relying heavily on US exports are particularly exposed.

 

The global credit rating agency also noted that India's growth, despite slowing to 6.5 per cent in FY 2026 from 6.7 per cent in FY2025, will remain highest amongst the advanced and emerging G-20 countries due to support from the tax measures and continued monetary easing. 

 

“India's growth will remain the highest of the advanced and emerging G-20 countries, supported by tax measures and continued easing,” the report said. 

 

On the inflation front, the report projected India's inflation to average 4.5 per cent in the current financial year from 4.9 per cent in FY 2025.