Fitch Raises India's GDP Growth Forecast to 6.9%
Global rating agency Fitch has raised India's GDP growth forecast for the financial year ending March 2026 from 6.5% to 6.9% in its latest Global Economic Outlook. According to the report, India continues to show resilience amid global geopolitical uncertainties and is expected to maintain a growth rate above 6% for the next three years.
Domestic Demand Driving Growth
The primary reason behind the revised forecast is strong domestic demand. Rising real incomes and favorable financial conditions are expected to boost consumer spending and strengthen investments, keeping the economy slightly above its potential output.
RBI May Cut Repo Rate by 25 Basis Points
Fitch predicts that India’s GDP growth may be 6.3% in FY2027 and 6.2% in FY2028. The Reserve Bank of India is expected to reduce the repo rate by 25 basis points by the end of this year, with rates remaining steady through 2026 before potentially rising again in 2027.
Mixed Global Growth Outlook
Fitch also revised the global growth forecast for 2025 to 2.4%, supported by better-than-expected data from China and the Eurozone. China's forecast was raised from 4.2% to 4.7%, the Eurozone's from 0.8% to 1.1%, and the US from 1.5% to 1.6%.
However, signs of a slowdown in the US are becoming more apparent. Fitch’s Chief Economist Brian Coulton noted that the increase in US tariffs will negatively impact global economic growth, with effects already visible in hard economic data, not just sentiment surveys.
US Tariff Hikes Pose Global Risk
Fitch warned that the US economic slowdown could adversely affect global growth. The agency expects the Federal Reserve to cut rates by 25 basis points each in September and December, followed by three more cuts in 2026. However, inflationary pressures by late 2025 may weaken consumer demand in the US.
India's Resilience Amid Global Uncertainty
Despite global headwinds, India remains in a strong macroeconomic position. Supported by robust domestic demand, higher incomes, and investment, India is expected to maintain growth above 6% for the foreseeable future.