Growth and inflation are levelling out, with strong domestic demand bolstered by modest easing in global and regional financial conditions, the rating agency said in its report on Asia-Pacific (APAC) sovereigns.
But proposed trade restrictions by the US would weaken economic output across the region, it noted.
"We expect only gradual fiscal consolidation, and debt to remain significantly higher than the Baa-rated peer median of around 57 per cent," Moody's said.
"Despite gains in revenue in recent years [in India], we also expect debt affordability to remain much weaker than rated peers," it added.
Geopolitical risks will persist this year in the APAC region, flowing from tensions in the US-China relationship and around regional hotspots, it observed.
Moody's sees a low likelihood of a military conflict in the Taiwan Strait or the Korean Peninsula, but tensions will remain elevated, driven primarily by US-China ties.
"These tensions are shaping trade and investment flows, which may be further diverted away from China as the US tightens investment in strategic sectors, further weakening China's economy and dampening regional growth. However, this shift could benefit India and Southeast Asian economies," Moody's added.
Fibre2Fashion News Desk (DS)