Fitch keeps India's GDP growth at 6.4 pc in FY27 amid West Asia crisis
New Delhi, June 9
Fitch Ratings has kept India's GDP growth at 6.4 per cent for FY27, saying that the ongoing West Asia crisis and global oil situation is likely to slow down the economy in the upcoming quarters this fiscal.
In a note, the global leader in credit ratings and research said that "We expect GDP growth to ease to 6.4 per cent in FY27, a downward revision of 0.3pp from March".
Domestic demand will be the main driver of growth, but lower imports in real terms imply positive contributions to growth from net external demand, according to its June Global Economic Outlook.
Fitch expects GDP growth to pick up in FY28 as the Middle East crisis and the oil shock subsides, with stronger consumer spending and investment translating to a growth rate of 6.7 per cent, and ease towards trend growth of 6.4 per cent in FY29.
Fitch Chief Economist Brian Coulton said that the oil price shock is hitting world growth prospects and increasing downside risks.
"But we are also amid a very pronounced boom in global spending on IT and that is cushioning the impact on activity in the near term, particularly in Asia," he noted.
Fitch said India's consumer price inflation has not yet risen significantly. "We expect inflation to rise steadily over the months ahead, reaching 5.3 per cent by the end of the year (2026). This reflects a combination of base effects and higher energy prices. Forecasts for below-average monsoon rains and the current heatwave in parts of India raise the risk of even stronger price rises," Fitch said.
On the Indian rupee, it said "we do not expect a further, significant depreciation in the Indian rupee over the rest of the year".
The Reserve Bank of India (RBI) last week projected real GDP growth for 2026-27 at 6.6 per cent -- with Q1 at 6.6 per cent; Q2 at 6.3 per cent; Q3 at 6.5 per cent; and Q4 at 6.8 per cent -- saying that prolonged global supply chain disruptions, volatility in global financial markets, and weather-related shocks continue to pose downside risks to the domestic growth outlook.
— IANS
Reader Comments
The IT boom cushioning Asia's growth sounds promising, but what about the common man? Inflation at 5.3% by end of 2026, heatwaves affecting crops, and monsoon predictions are worrying. We need more focus on agriculture and food prices, not just GDP numbers. 🌾
Fitch's 6.4% is lower than RBI's 6.6% projection. That's a notable gap. The oil shock and Middle East tensions are definitely headwinds, but India's domestic demand remains strong. Let's see how the monsoon plays out—it’s always a wildcard for our economy. 🌧️
Honestly, 6.4% is still respectable globally, but we must question why Fitch keeps revising downward. The West Asia crisis is beyond our control, but why aren't we pushing harder for renewable energy to reduce oil dependency? We need long-term solutions, not just quarterly forecasts. 😕
Good to see Fitch acknowledging IT spending as a buffer. India's tech sector is really stepping up. But the heatwave and monsoon risks are no joke—if food inflation spikes, RBI will have a tough time balancing rates and growth. Let's hope for good rains this year! ☀️🌧️
The rupee not depreciating significantly is a relief. But I'm skeptical—global oil prices and US Fed actions could still shake things up. RBI's 6.6% projection seems optimistic; let's see if we can actually hit that amid global uncertainty. Time to strengthen our forex reserves! 💵
M We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.