Moody's Forecasts Rising Unemployment and Inflation in India for 2026
India's unemployment to tick up, inflation to rise in 2026: Moody's
Business Standard
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According to Moody's Analytics, India's unemployment rate is expected to rise to 7.0% in 2026, the highest in the Asia-Pacific region, while inflation is projected to increase to 4.5% from 2.2% in 2025. The report attributes these trends to rising commodity prices and ongoing geopolitical tensions.
- 01India's unemployment rate projected to rise to 7.0% in 2026.
- 02Inflation expected to increase to 4.5% in 2026, the highest in the APAC region.
- 03Higher energy prices are contributing to rising inflation and production costs.
- 04Domestic demand in the APAC region remains below pre-pandemic levels.
- 05Economic growth in the APAC region is projected to slow to 3.8% in 2026.
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Moody's Analytics projects that India's unemployment rate will increase to 7.0% in 2026, up from 6.9% in 2025, marking the highest rate among Asia-Pacific countries. Following suit, inflation is expected to rise significantly to 4.5% in 2026, compared to 2.2% in 2025. This inflationary trend is largely attributed to surging commodity prices driven by geopolitical tensions, particularly in the Middle East, which have impacted energy costs and, consequently, transportation and production expenses in India. The report indicates that inflationary pressures began to emerge in March 2026, with retail inflation rising from 0.25% in October 2025 to 3.4% by March 2026. Furthermore, Moody's forecasts a slowdown in economic growth across the Asia-Pacific region, estimating a decline to 3.8% in 2026 from 4.3% in 2025. The report highlights that while exports have previously bolstered growth, rising tariffs and global volatility may hinder future trade momentum. The ongoing demand for electronics and semiconductor exports, spurred by the global boom in artificial intelligence, has been a significant growth driver, although this expansion may soon face challenges due to hardware shortages and rising prices.
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The rising unemployment and inflation rates could lead to increased financial strain on households, affecting purchasing power and living standards.
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