S&P Global Ratings on Monday reduced India's growth rate (GDP rate) forecast for fiscal year 2026 and fiscal year 2027. According to the ratings agency, higher interest rates and lower fiscal impulses are impacting urban demand. In an update to its economic forecast for Asia-Pacific economies after the US election results, the rating agency projected growth at 6.7 per cent in the 2025-26 financial year (April 2025 to March 2026) and 6.6 per cent in the next financial year, PTI reported. 8 percent GDP growth rate is estimated. This is lower than previous estimates of 6.9 percent and 7 percent respectively.
Know the latest estimates for financial year 2025
For fiscal year 2025, S&P Global has pegged the GDP growth rate at 6.8 percent. The agency said that in India we see GDP growth coming in at 6.8 percent in this financial year. While Purchasing Managers' Index (PMI) remains reassuringly in expansion territory, other high frequency indicators suggest some transitory moderation in growth momentum due to the damage suffered by the construction sector in the September quarter. However, the agency feels that India's GDP will grow at the rate of 7 percent in the financial year 2028.
This much forecast was made for China
S&P Global Ratings kept China's growth forecast at 4.8 percent through 2024, but cut its forecast for next year to 4.1 percent from 4.3 percent previously and to 3.8 percent in 2026 from the previous estimate of 4.5 percent. The impending change in the US administration will be challenging for China and the rest of Asia-Pacific. The report titled 'Economic Outlook Asia-Pacific Q1 2025: US trade turnaround blurs the horizon' said US tariff increases have become more likely, particularly on China, and potential changes to the US macro picture. -Giving rise to different interest rate expectations.”
Central banks will remain cautious
Louis Kooij, chief economist for S&P Global Ratings Asia-Pacific, said rising risks are clouding the economic outlook for Asia-Pacific in the first quarter of 2025. The majority of the sector should be able to continue growing solidly. Central banks will probably remain cautious not to lower their policy rates too quickly. China's stimulus measures should support growth, but S&P expects its economy to be hit by US trade tariffs on its exports.
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