Fitch Ratings has revised India’s growth forecast for 2025-26 down by 10 basis points to 6.4% and further lowered the 2026-27 estimate by 20 basis points to 6.3%. The downgrade reflects concerns over escalating global trade tensions. Similarly, the Reserve Bank of India recently reduced its growth projection for 2025-26 to 6.5%, down from its earlier estimate of 6.7%. This revision comes in the wake of rising global uncertainties triggered by reciprocal tariffs imposed by the US, which have impacted trade flows and investor sentiment. Both agencies highlighted growing concerns around global economic instability and its effect on India’s outlook.

The global rating agency has similarly revised downwards growth rates for several economies, including France, the UK, Eurozone, Australia, Canada, Germany, China, the US, among a few others.

Fitch Ratings’ forecasts for world growth have been sharply lowered in response to the recent severe escalation in the global trade war.

“US ‘Liberation Day’ tariff hikes were far worse than expected,” said Fitch. “Massive policy uncertainty is hurting business investment prospects, equity price falls are reducing household wealth, and US exporters will be hit by retaliation,” it added.

The Fitch quarterly Global Economic Outlook (GEO) cuts world growth in 2025 by 40 basis points and China and US growth by 50 basis points. US annual growth is expected to remain at 1.2% for 2025 but will slow to a crawl through the year at just 0.4% in October-December 2025.

China’s growth is expected to fall below 4% both this year and next, while growth in the Eurozone will remain stuck well below 1%. World growth is projected to fall below 2% this year; excluding the pandemic, this would be the weakest global growth rate since 2009.

In the US, Fitch expects the Federal Reserve to wait until the October-December 2025 quarter before cutting rates, despite the deteriorating US growth outlook.

(With Inputs From ANI)