Has Fitch Upgraded India's FY26 Growth Forecast to 6.9%?
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Synopsis
Fitch Ratings has elevated India's growth forecast for FY26 to 6.9%, reflecting strong domestic demand and investments. Despite global uncertainties, India is expected to maintain over 6% growth in the coming years. What does this mean for the economy? Discover the insights from Fitch's latest Global Economic Outlook.
Key Takeaways
- India's growth forecast for FY26 is now 6.9%.
- Domestic demand is a key growth driver.
- RBI is expected to cut rates by 25 basis points.
- Global growth forecast for 2025 is 2.4%.
- US economic slowdown shows clear signs.
New Delhi, Sep 10 (NationPress) India continues to demonstrate its resilience in the face of geopolitical uncertainties, with projections indicating growth will remain above 6 percent over the coming three years. This outlook has been upgraded to 6.9 percent for the current fiscal year, according to the latest report from Fitch Ratings titled ‘Global Economic Outlook’, released on Wednesday.
Following a strong outturn in Q2 2025, where growth reached 7.8 percent, Fitch has increased its forecast for the fiscal year ending March 2026 (FY26) from 6.5 percent to 6.9 percent, as indicated in the June report.
The primary driver of this growth is expected to be domestic demand, fueled by robust real income dynamics that will enhance consumer spending, alongside looser financial conditions that are anticipated to stimulate investment, the report states.
Fitch projects that India’s annual growth will reach 6.3 percent in FY27, with expectations that the economy will slightly surpass its potential, leading to an anticipated decline to 6.2 percent in FY28.
The report also suggests that the Reserve Bank of India (RBI) is likely to implement a 25 basis points rate cut towards the end of the year as it evaluates the effects of previous policy adjustments, with the rates expected to remain steady until the end of 2026. An increase in rates is anticipated in 2027.
Globally, Fitch has slightly raised its world growth forecast for 2025 to 2.4 percent, supported by stronger economic data from China and the eurozone, although there are evident signs of a slowdown in the US economy.
The growth forecast for China has been revised upward to 4.7 percent, while the eurozone's forecast has increased to 1.1 percent, and the US forecast now stands at 1.6 percent.
For 2026, global growth is projected to be 2.3 percent.
“While there is greater clarity regarding US tariff hikes, which are significant and will negatively impact global growth, evidence of a slowdown in the US economy is becoming increasingly apparent in hard data, rather than just sentiment surveys,” stated Brian Coulton, Chief Economist at Fitch.
Fitch anticipates that the Federal Reserve will implement two rate cuts of 25 basis points each in September and December, followed by three additional cuts in 2026.
The agency also foresees rising price pressures in the US by late 2025, which may hinder real wage growth and diminish consumer demand as job growth begins to slow.
Point of View
The positive revision in India's growth forecast by Fitch Ratings highlights the country's economic resilience and potential. This outlook is crucial for investors and policymakers, emphasizing the importance of maintaining robust domestic demand and investment to sustain growth in the face of global challenges.
NationPress
10/09/2025
Frequently Asked Questions
What is India's updated growth forecast for FY26 according to Fitch?
Fitch has raised India's growth forecast for FY26 to 6.9%, up from 6.5%.
What factors are driving India's growth?
The main drivers of growth are strong domestic demand and robust consumer spending supported by favorable economic conditions.
What is the expected growth for the global economy in 2025?
Fitch has slightly increased the global growth forecast for 2025 to 2.4%, supported by stronger data from regions like China and the eurozone.
When is the RBI expected to cut rates?
The Reserve Bank of India is expected to implement a 25 basis points rate cut towards the end of the year.
What are the implications of the US economic slowdown?
The US economic slowdown could pose challenges for global growth, with potential impacts on consumer demand and investment.
