Fitch Ratings has affirmed that India’s GDP growth for FY27 will remain at 6.4%, citing potential economic slowdowns due to the ongoing West Asia crisis and global oil dynamics. The credit rating agency anticipates a decline from its previous estimate by 0.3 percentage points.
The primary growth driver is expected to be domestic demand, with positive contributions from net external demand due to reduced imports in real terms, as outlined in the June Global Economic Outlook by Fitch. Looking ahead, Fitch projects a growth rate of 6.7% in FY28 as the Middle East crisis subsides, followed by a moderation to 6.4% in FY29, aligning with trend growth.
Fitch’s Chief Economist, Brian Coulton, highlighted the impact of the oil price shock on global growth prospects, emphasizing increased downside risks. However, he noted a significant surge in global IT spending, particularly in Asia, which is mitigating the immediate economic effects.
Regarding inflation, Fitch mentioned that India’s consumer price inflation has not surged significantly yet. The agency forecasts a gradual increase in inflation to 5.3% by the end of 2026, driven by base effects and higher energy prices. Fitch also cautioned about potential price escalation risks due to below-average monsoon rains and ongoing heatwaves in parts of India.
Fitch’s assessment on the Indian rupee indicates a stable outlook, expecting no substantial depreciation in the currency for the remainder of the year. In contrast, the Reserve Bank of India (RBI) recently projected real GDP growth for 2026-27 at 6.6%, with varying quarterly growth rates, citing global supply chain disruptions, financial market volatility, and weather-related shocks as persistent downside factors.
