New Delhi, Sep 23 (NationPress) Fueled by strong domestic demand, Goods and Services (GST) rate adjustments, and income tax reforms, India's GDP growth is projected to remain stable at 6.5 percent for this fiscal year (FY26), as reported by S&P Global on Tuesday.

The report anticipates that domestic demand will continue to thrive, aided by a favorable monsoon season, reductions in income and GST taxes, and increasing government investments.

According to S&P Global’s ‘Q4 Asia Pacific Economic Outlook’, “GDP growth in the June quarter exceeded our expectations at 7.8 percent.”

For India, “we have adjusted our inflation forecast to 3.2 percent for this fiscal year following a larger than anticipated decline in food inflation.”

This adjustment allows space for future monetary policy changes, and we foresee a 25 bps rate cut by the Reserve Bank of India (RBI) within this fiscal year.

Investment in the Asia-Pacific region, particularly in India, remains strong, primarily driven by government initiatives. Domestic demand has also shown resilience, especially in emerging markets.

In contrast, China has seen its overall exports remain stable through August, although shipments to the US have sharply decreased. In August, exports to the US fell by 33 percent year-on-year in US dollar terms. However, exports to other regions, particularly the ASEAN area, have increased significantly.

The report predicts a notable slowdown in exports in the coming months due to higher US tariffs and a decline in global growth. Although elevated US tariffs on other economies may position China relatively better in the US market, its exporters are facing much steeper tariffs under the previous administration.

After a strong start to the year, both consumption and investment in China have decelerated. A persistent decline in housing sales is negatively impacting housing investment and consumer confidence.

“We foresee China's economy slowing to approximately 4 percent year-on-year in the latter half of 2025 and 2026 due to declining exports, subdued domestic demand, and limited macroeconomic stimulus. Price pressures are likely to continue,” the report adds.

In the Asia-Pacific region, comparatively resilient domestic demand should mitigate the impact of greater external challenges resulting from increased US import tariffs and slower global growth.