India's huge domestic market is likely to insulate the nation from the effects of a US tariff increase, with global ratings agency Fitch predicting a 6.5% FY26 growth rate.
Fitch reaffirmed its FY26 prediction while increasing its FY27 estimate to 6.3%, from 6.2% in December. The prediction is higher than the OECD's 6.4% FY26 growth estimate but lower than the Reserve Bank of India's estimate of 6.7%.
A recent Morgan Stanley report also pointed to India as one of the better-placed nations in Asia in the face of global uncertainty, pointing to its low goods exports-to-GDP ratio and robust economic fundamentals. In spite of direct tariff vulnerabilities, India's limited exposure to the slowdown of global trade is a plus for it.
The Indian economy demonstrated resilience, expanding by 6.2% in Q3 following a fall to 5.6% in Q2. Consumer and business sentiment continues to be robust, infrastructure growth underpins investment, and exports registered a strong pickup. Fitch also sees India's inflation remaining at 4% in FY26, rising modestly to 4.3% in FY27.
The agency anticipates RBI to further lower rates in 2025 to get the repo rate to 5.75% by December. Meanwhile, Fitch downgraded its global growth projection to 2.3% for 2025, from 2.9% in 2024.
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