Fitch Raises Indias Economic Growth Forecast to 7.5% Amid Geopolitical Tensions

New Delhi, March 13: Despite a slight slowdown in economic activities during January and February, domestic demand is expected to drive India’s GDP growth rate to 7.5% for the fiscal year ending March 2026. This is an increase from the previous forecast of 7.4%, according to a report released by credit rating agency Fitch Ratings on Friday.

The report indicates that consumer spending is projected to grow by approximately 8.6%, while investments may rise by around 6.9%, contributing positively to economic development.

High-frequency indicators such as GST collections, manufacturing output, air travel, and digital payments suggest that India’s economy is maintaining steady momentum, even amid a global trade slowdown.

Fitch noted that India has been among the stronger-performing economies in recent months, primarily due to robust domestic demand, improved activity in the service sector, and consistent government investment in infrastructure.

However, the report also highlighted signs of slowing economic activities during January and February, as indicated by PMI survey data. Despite this, the economy remains resilient, with credit growth still in double digits.

Fitch believes that economic growth may slow slightly in the first half of fiscal year 2026-27, as rising inflation could pressure real incomes and limit consumer spending.

According to the report, India’s GDP growth rate was 7.8% in the third quarter of fiscal year 2026, down from 8.4% in the previous quarter. This decline is partly attributed to India changing its GDP base year to 2022-23.

Fitch stated that while investment growth may slow in the short term, improvements in financial conditions and a decrease in real interest rates could lead to a rebound in the second half of fiscal year 2026-27.

The agency projects India’s economic growth rate to be 6.7% in fiscal year 2026-27 and 6.5% in 2027-28.

Fitch also mentioned that the global economy could grow at a rate of approximately 2.6% in 2026, slightly higher than the estimate provided in December. However, this will depend on whether the recent rise in oil prices is temporary.

The report further forecasts that due to weak growth in consumer spending, the U.S. economy is likely to grow at about 2.2% in 2026, while China’s economic growth may decline from 5% in 2025 to around 4.3% in 2026.