Fitch Ratings on Thursday revised India’s GDP growth forecast for FY26 to 6.4%, citing global economic uncertainties, while maintaining its projection of 6.3% for FY27.
The global ratings agency also lowered its estimates for FY25 and FY26 by 10 basis points to 6.2% and 6.4% respectively, attributing the downgrade to rising concerns over a potential global trade war.
Fitch retained its outlook for FY27 at 6.3%, reflecting expectations of relative stability in India’s economic performance over the medium term.
The agency also downgraded global growth projections for 2025 by 0.4 percentage points, while reducing forecasts for the US and China by 0.5 percentage points from its March outlook.
“It is difficult to predict US trade policy with any confidence. Massive policy uncertainty is hurting business investment prospects, equity price declines are reducing household wealth, and US exporters will be hit by retaliation,” Fitch noted in a special update to its quarterly Global Economic Outlook.
For 2025, US GDP growth is expected to remain positive at 1.2%, while China’s growth is projected to fall below 4% in both 2025 and 2026. The eurozone’s growth is forecast to stay well below 1% during the same period.
Despite global headwinds, Fitch believes that India’s large domestic market will shield it from the brunt of global trade disruptions, including the impact of US tariff hikes.
A recent report by Morgan Stanley echoed this sentiment, identifying India as the “best-placed country in Asia” amid global uncertainties triggered by US President Donald Trump’s tariff threats. The report cited India’s low goods exports-to-GDP ratio and strong economic fundamentals as key insulating factors.
“While India is exposed to direct tariff risks, we believe it is less vulnerable to a global goods trade slowdown, considering it has the lowest goods exports-to-GDP ratio in the region,” the report stated.
India’s economy regained momentum in Q3 of FY25, expanding by 6.2%, after dipping to a near two-year low of 5.6% in the July-September quarter.
(With IANS)
