New Delhi
Fitch Ratings has retained India’s GDP growth forecast at 6.4 per cent for FY27, while warning that the ongoing West Asia crisis and elevated oil prices could weigh on economic activity in the coming quarters.
In its June Global Economic Outlook, the global credit rating agency said it expects India’s economic growth to moderate to 6.4 per cent in FY27, reflecting a downward revision of 0.3 percentage points from its March projection.
According to Fitch, domestic demand will remain the primary driver of growth. However, lower imports in real terms are expected to contribute positively through net external demand, partially offsetting global headwinds.
The agency forecasts a recovery in FY28, projecting GDP growth at 6.7 per cent as geopolitical tensions ease and the impact of higher oil prices subsides. Stronger consumer spending and investment activity are expected to support the rebound. Growth is then projected to moderate to 6.4 per cent in FY29, aligning with the economy’s long-term trend.
Fitch Chief Economist Brian Coulton said the oil price shock is affecting global growth prospects and increasing downside risks. However, he noted that a significant rise in global spending on information technology is helping cushion the impact on economic activity, particularly across Asia.
On inflation, Fitch said consumer price pressures in India have not risen sharply so far. It expects inflation to increase gradually and reach 5.3 per cent by the end of 2026, driven by higher energy costs and base effects.
The agency also flagged weather-related risks, including forecasts of below-average monsoon rainfall and ongoing heatwave conditions in parts of the country, which could put additional pressure on food prices.
Regarding the currency, Fitch said it does not expect any significant further depreciation of the Indian rupee this year.
Last week, the Reserve Bank of India projected real GDP growth at 6.6 per cent for FY27, while cautioning that global supply chain disruptions, financial market volatility, and adverse weather conditions remain key downside risks.
BOX
- India growth forecast retained at 6.4%
- West Asia crisis poses economic risks
- Domestic demand remains key growth driver
- Inflation may rise to 5.3%
- RBI projects higher 6.6% growth
