Global ratings agency Fitch on Wednesday said that the low reliance on external demand is expected to insulate India from US action on tariffs, with the economy maintaining growth of 6.5 per cent in FY26 and 6.3 per cent the following year.
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Global ratings agency Fitch on Wednesday said that the low reliance on external demand is expected to insulate India from US action on tariffs, with the economy maintaining growth of 6.5 per cent in FY26 and 6.3 per cent the following year.
“We expect overall GDP growth of 6.5 per cent in FY25-26 and a slight slowdown in growth in FY26-27, to 6.3 per cent . These forecasts are little changed from the December Global Economic Outlook (GEO),” Fitch said in the report.
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It projects the economy to grow 6.4 per cent in the current fiscal. Further, on the prices front, Fitch kept India’s inflation forecast unchanged at 4 per cent and upped the FY27 forecast to 4.3 per cent from the 4 per cent projected earlier.
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Further, on the global front, Fitch ratings lowered growth forecast by 0.3 percentage points to 2.3 per cent compared with 2.9 per cent in 2024.
“Our latest economic forecasts assume a 15 per cent Effective Tariff Rate (ETR) will be imposed on Europe, Canada, Mexico, and others in 2025, and 35 per cent on China,” it said.
“This will push the US ETR to 18per cent this year before moderating to 16per cent next year as the ETR on Canada and Mexico falls to 10per cent. This would be the highest rate for 90 years,” it said.
“Modelling suggests tariff increases will reduce GDP by about 1pp in the US, China, and Europe by 2026.”
Fitch Rating has also remained optimistic about rate cuts. It expected the rates to settle at 5.75per cent by the end of FY26 and no cuts by FY27 end.
In its December update, the rating agency had projected a 6.25 per cent rate for FY26 and 6 per cent for FY27 end.
“The RBI began loosening policy in early February with a 25bp cut in the repo rate to 6.25per cent. We expect two further cuts in the policy rate this (calendar) year so that the policy rate will be 5.75 per cent by December 2025 (revised down from 6.25 per cent in the last GEO),” it said.
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