Fitch Raises India’s FY26 Growth Forecast To 7.5 Per Cent Despite Global Geopolitical Tensions

New Delhi, March 13: India’s GDP is expected to grow 7.5 per cent in the fiscal year ending March 2026, higher than 7.4 per cent forecast earlier, due to resilient domestic demand even as activity showed tentative slowing in January and February, a report said on Friday.

Domestic demand to drive growth

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 the 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.

Signs of slowing activity in early months

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.

Recent GDP data and investment outlook

India’s Q3FY26 GDP growth eased to 7.8 per cent from 8.4 per cent in the prior quarter after the country 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.

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Global growth outlook

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

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