Fitch maintains India’s FY26 GDP growth forecast at 6.5%, raises FY27 projection

​Ratings major Fitch Ratings has maintained India's GDP growth forecast at 6.5% for FY 2025-26, while marginally increasing its GDP estimates for FY27 to 6.3%. Fitch has said the Reserve Bank of India could resort to two additional policy rate cuts this year, which is expected to bring the repo rate cut down to 5.75% by December 2025, the March Global Economic Outlook report by Fitch Ratings shows.

On the global front, says Fitch, the new US administration has started a global trade war that will reduce US and world growth, push up US inflation and delay Federal Reserve rate cuts. "We have cut both our US 2025 growth forecast to 1.7% from 2.1% in the December 2024 Global Economic Outlook (GEO) and our 2026 forecast to 1.5% from 1.7%. These rates are well below trend and down from almost 3% annual growth in 2023 and 2024," says Fitch.

The ratings agency says fiscal easing in China and Germany will cushion the impact of higher US import tariffs, but growth in the eurozone this year will still be a lot weaker than forecast in the December GEO. "Mexico and Canada will experience technical recessions given their high US trade exposure, and we have cut their 2025 forecasts by 1.1pp and 0.7pp, respectively. We expect world growth to slow to 2.3% this year, well below the trend and down from 2.9% in 2024. This is a downward revision of 0.3pp and reflects broad-based cuts across developed and emerging economies. Growth will remain weak at 2.2% in 2026."

​Fitch Ratings' current projections are largely in line with the latest monetary policy announcements by the Reserve Bank of India, which projected India's real GDP growth for FY26 at 6.7%, with Q1 GDP growth expected at 6.7%, Q2 at 7.0%, Q3 at 6.5%​ and Q4 at 6.5%.

The American credit rating agency in June 2024 revised its India GDP forecast by 0.2 percentage points to 7.2% in the current financial year, saying the country could see a stronger-than-expected growth rate.

On March 1, the International Monetary Fund (IMF) said India’s prudent macro policies and reforms have contributed to making the economy resilient and the fastest-growing major economy, which is essential to achieving its ambition of becoming an advanced economy by 2047. "Real GDP is expected to grow at 6.5 per cent in 2024/25 and 2025/26, supported by robust growth in private consumption on the back of sustained macroeconomic and financial stability. Headline inflation is expected to converge to target as food price shocks wane," the IMF report added.