Fitch Boosts India's Growth Forecast to 7.5% Amid Global Headwinds

Credit rating agency Fitch Ratings said domestic demand will drive the growth, with consumer spending and investment expected to expand by 8.6 per cent and 6.9 per cent, respectively, in FY26.

High frequency indicators including GST collections, manufacturing output, air travel and digital payments indicate steady momentum despite headwinds from slowing global trade.

India's economy ranks among few bright spots in the global landscape over the past few months, supported by resilient domestic demand, robust services activity and sustained public investment in infrastructure, according to the report.

However, the report pointed out tentative signs that real activity is slowing in January and February, such as data from PMI surveys, but maintained that the economy remains resilient and credit growth is still in double digits. "We expect growth to slow in H1FY26/27; rising inflation will constrain real incomes, limiting consumer spending growth," it said.

India's Q3FY26 GDP growth eased to 7.8 per cent from 8.4 per cent in the prior quarter after the country has rebased its GDP base year to 2022-23. The ratings agency said investment growth is likely to slow in the short term in India but should recover from H2FY26/27 with change in financial conditions and decline in real interest rates.

It expects growth to moderate to 6.7 per cent in FY26/27 and 6.5 per cent in FY27/28.

The ratings agency expects the global economy to grow in 2026 at 2.6 per cent, an upward revision from its December outlook, but said this depends on the recent spike in oil prices being a temporary factor.

Fitch forecasted the US economy to grow by 2.2 per cent per cent in 2026 and China's economy to slow to 4.3 per cent from 5 per cent in 2025, over weakening consumer spending growth.

- IANS