New Delhi, Sep 10: India is showing resilience amid geo-political uncertainties and is projected to stay above 6 per cent growth over the next three years — amid a raised outlook of 6.9 per cent growth in current fiscal — according to the latest Fitch Ratings’ ‘Global Economic Outlook’ released on Wednesday.
On the back of the Q2 2025 outturn (7.8 per cent growth), Fitch has revised up its forecast for the fiscal year ending March 2026 (FY26) to 6.9 per cent from 6.5 per cent in the June report. Domestic demand will be the key driver of growth, as strong real income dynamics support consumer spending and looser financial conditions should feed through to investment, said the report.
According to the Fitch note, annual growth in India is likely to hit 6.3 per cent in FY27 and with the economy operating slightly above its potential, “we expect growth will edge down to 6.2 per cent in FY28”. “We still expect the Reserve Bank of India (RBI) to cut rates by 25bp towards the end of the year, as it assesses the impact of the policy loosening already implemented, and that rates will stay there until end-2026. We expect the RBI to start raising rates in 2027,” said the report.
The global rating agency raised its 2025 world growth forecast slightly to 2.4 per cent, helped by stronger data from China and the eurozone, but warned that the US economy is showing clearer signs of slowing. China’s growth forecast has been revised upward to 4.7 per cent (from 4.2 per cent in Fitch’s earlier June forecast), the eurozone’s to 1.1 per cent (from 0.8 per cent), and America’s to 1.6 per cent (from 1.5 per cent).
For 2026, global growth is pegged at 2.3 per cent. “Greater clarity about US tariff hikes does not alter the fact that they are huge and will reduce global growth. And evidence of a slowdown in the US is now appearing in the hard data; it’s no longer just in the sentiment surveys,” according to Brian Coulton, Chief Economist at Fitch.
The global rating agency expects the Federal Reserve to deliver two rate cuts of 25 basis points each in September and December, followed by three more in 2026. Fitch also expects price pressures to build later in 2025 in the US, curbing real wage growth and weakening consumer demand as job growth is already slowing.
IANS