India Well-Equipped To Handle Future Shocks; Among Most Resilient Emerging Economies: Moody’s

ENA Economy 2026-05-05 17:27:53 New Delhi, May 5 (KNN) India has emerged as one of the most resilient large emerging market economies since 2020, supported by strong foreign exchange reserves and stable macroeconomic policies, according to Moody's Ratings. In a report on emerging markets released on Tuesday, the agency noted that Indias sizeable forex reserves have helped contain currency volatility and maintain investor confidence during periods of global uncertainty, PTI reported Well-Placed to Manage Future Shocks Moodys said India is better positioned than many peer economies to handle future global shocks, citing its predictable monetary policy framework, well-anchored inflation expectations, and flexible exchange rate mechanism. India's reliance on domestic funding is balanced by deep local markets and sizeable reserves ... Nevertheless, India's relatively high debt burden and weak fiscal balance limit the amount of space available to respond to successive shocks, Moodys added. Constraints from Fiscal Position Despite these strengths, Moodys highlighted that Indias relatively high public debt and weak fiscal balance could limit its ability to respond to repeated external shocks. The agency emphasised that while buffers remain robust, fiscal constraints may restrict policy flexibility in adverse scenarios. Emerging Markets Show Broader Stability Moodys observed that several major emerging market economies—including India, Indonesia, Mexico, Brazil, and South Africa—have managed to absorb multiple global shocks over the past five years without significant disruptions to market access or sharp increases in borrowing costs. This resilience reflects improvements in policy frameworks, stronger buffers, and relatively supportive global financial conditions. Multiple Global Stress Events Assessed The assessment covered four major stress episodes: the onset of the COVID-19 pandemic in 2020, the global inflation surge and tightening cycle led by the US Federal Reserve in 2022, regional banking stress in the US in 2023, and renewed global trade tensions in 2025. According to Moodys, these events typically create pressure on exchange rates, tighten funding conditions, and increase refinancing risks for emerging economies. Supportive External Conditions Helped The report noted that relatively accommodative global financial conditions following recent shocks also played a role in helping emerging markets navigate volatility. Overall, Moodys concluded that Indias policy choices, institutional strength, and financial buffers have positioned it favourably among emerging markets, even as fiscal challenges remain a key area to monitor. (KNN Bureau) 46019 https://knnindia.co.in/news/newsdetails/economy/india-well-equipped-to-handle-future-shocks-among-most-resilient-emerging-economies-moodys 2026-05-05 17:27:53 knnindia.co.in India Well-Equipped To Handle Future Shocks; Among Most Resilient Emerging Economies: Moody’s