New Delhi: Fitch Ratings has revised India's growth projection for the fiscal year 2025-26, reducing it by 10 basis points to 6.4 percent. For 2026-27, the forecast has been adjusted downwards by 20 basis points to 6.3 percent.
Additionally, the Reserve Bank of India has also revised its growth estimate for the current fiscal year 2025-26, lowering it from 6.7 percent to 6.5 percent due to uncertainties stemming from trade conflicts following the reciprocal tariffs imposed by the United States.
The global rating agency has similarly downgraded growth forecasts for various economies, including France, the UK, the Eurozone, Australia, Canada, Germany, China, and the US, among others.
Fitch Ratings has significantly reduced its global growth forecasts in light of the recent intensification of the global trade war.
"The tariff increases on 'Liberation Day' in the US were much more severe than anticipated," Fitch stated.
"Substantial policy uncertainty is negatively impacting business investment prospects, declines in equity prices are diminishing household wealth, and US exporters will face repercussions from retaliatory measures," it further noted.
In its quarterly Global Economic Outlook (GEO), Fitch has cut the world growth forecast for 2025 by 40 basis points, with growth projections for China and the US reduced by 50 basis points.
For the US, annual growth is anticipated to remain at 1.2 percent for 2025, but it is expected to decelerate significantly, dropping to just 0.4 percent in the last quarter of 2025 (October-December).
China's growth is anticipated to dip below 4 percent for both this year and the next, while the eurozone's growth is projected to remain significantly under 1 percent.
Global growth is expected to fall below 2 percent this year; if we exclude the pandemic period, this would mark the slowest growth rate worldwide since 2009.
In the United States, Fitch predicts that the Federal Reserve will hold off on rate cuts until the fourth quarter of 2025, despite a declining growth outlook.
"Import prices are likely to increase significantly, and there has been a concerning rise in medium-term inflation expectations among US households over the last two months. Nevertheless, the unexpected decline of the US dollar has provided more flexibility for other central banks to implement easing measures, leading us to anticipate more substantial rate cuts from the ECB and in emerging markets," Fitch stated.
