Fitch Ratings’ in its latest Global Economic Outlook report forecasted India’s economy to grow by 7.2% in the current fiscal year with the central bank anticipated to implement a single quarter-point rate reduction, 0.2 % up than beating earlier projections predicted in March .
“We still expect the RBI to cut its policy rate this year, but only once, to 6.25%. In the March GEO we expected 50 basis points of cuts this year. We then expect 25 bps of cuts in both 2025 and 2026,” said the rating agency.
Meanwhile, Fitch expects that investment will continue to grow, albeit at a slower pace than in recent quarters, while consumer spending will recover, supported by high consumer confidence. However, the agency expects India’s growth to decelerate in subsequent years, approaching their medium-term trend estimate.
“We forecast real GDP growth of 6.5% in FY25/26 (unchanged from March), and 6.2% in FY26/27, driven by consumer spending and investment,” said Fitch.
Additionally, Fitch has also revised its global growth forecast for 2024 upward to 2.6% from the previous 2.4%, primarily due to increased confidence in Europe’s recovery prospects, the resurgence of China’s export sector, and robust domestic demand in emerging markets outside of China.
Fitch further predicts that India’s headline inflation will continue its downward trajectory, reaching 4.5% by the end of the calendar year and averaging 4.3% in 2025 and 2026. This places inflation slightly above the mid-point of the Reserve Bank of India’s target range of 2% to 6%.
