Fitch Forecasts India's GDP Growth at 6.4% for FY26, Maintains FY27 at 6.3%
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Synopsis
On April 17, Fitch Ratings projected India's GDP to grow by 6.4% for FY26 while maintaining FY27 estimates at 6.3%. The agency lowered growth forecasts for FY25 and FY26 due to global uncertainties, emphasizing India's resilience due to its large domestic market.
Key Takeaways
- Fitch projected India's GDP growth at 6.4% for FY26.
- Maintained FY27 GDP growth forecast at 6.3%.
- Global growth estimates for 2025 reduced by 0.4 percentage points.
- US trade policy uncertainty affecting global growth.
- India's domestic market expected to mitigate tariff impacts.
New Delhi, April 17 (NationPress) Fitch Ratings announced on Thursday that it anticipates India's GDP growth to reach 6.4 percent for FY26, amidst ongoing global uncertainties. The agency has kept its projections for the subsequent financial year (FY27) stable at 6.3 percent.
Fitch has adjusted its GDP growth forecasts downward for both the 2024-25 fiscal year and the ongoing 2025-26 fiscal year by 10 basis points, predicting 6.2 percent and 6.4 percent growth respectively, citing concerns over a potential global trade conflict.
For the 2026-27 fiscal year, the growth estimate remains unchanged at 6.3 percent, according to Fitch's analysis.
In addition to revising India's growth outlook, Fitch has also lowered its global growth forecasts for 2025 by 0.4 percentage points and has reduced its growth estimates for both China and the US by 0.5 percentage points from its previous outlook in March.
Fitch pointed out, "The unpredictability of US trade policies complicates forecasting. Significant policy uncertainty is damaging investment prospects, declines in equity prices are affecting household wealth, and US exporters are likely to face retaliation," as mentioned in its special update to the quarterly Global Economic Outlook.
The projected GDP growth rate for the US is anticipated to remain positive at 1.2 percent for 2025. Meanwhile, China's growth is expected to dip below 4 percent this year and the next, while growth in the eurozone is forecasted to stay well under 1 percent, based on Fitch's estimates.
According to the global ratings agency, the substantial size of India’s domestic market, which diminishes reliance on external demand, is likely to shield the nation from the impacts of US tariff increases.
A recent report by Morgan Stanley also indicated that India is the "best positioned country in Asia" amidst the global uncertainty triggered by US President Donald Trump's threats to raise tariffs, due to India’s low goods exports to GDP ratio and robust economic fundamentals.
"While India faces direct tariff threats, we believe that in general, India is less vulnerable to a slowdown in global goods trade, given its minimal goods exports to GDP ratio in the region," the report elaborated.
The Indian economy has shown signs of recovery, growing 6.2 percent in the third quarter of FY25, rebounding from a near two-year low of 5.6 percent during the July-September period.
