Fitch Cuts India’s FY25 GDP Forecast To 6.4 Per Cent But Remains Optimistic About Country's Economic Resilience

Fitch Ratings has revised India's economic growth forecast for the financial year 2024-25 to 6.4 per cent, a drop from its earlier projection of 7.0 per cent.

This adjustment aligns with the Reserve Bank of India’s (RBI) recent reduction in its growth estimate for the same period, which now stands at 6.6 per cent, down from 7.2 per cent.

“Fitch forecasts India's GDP to expand by 6.4 per cent in the financial year ending March 2025 (FY25) and 6.5 per cent in FY26, slowing from the 8.2 per cent pace in FY24. However, India's economic growth remains strong relative to that of global peers and supports our asset performance forecast." the rating agency noted.

The slowdown has also been reflected in the second-quarter GDP growth for FY25, which fell to 5.4 per cent, marking the slowest pace in seven quarters.

Other global financial institutions have followed suit in revising growth forecasts.

Goldman Sachs now predicts a growth rate of 6 per cent for FY25, down from its earlier estimate of 6.4 per cent.

Despite these adjustments, Fitch Ratings underscored India’s economic resilience.

“The Indian economy recovered strongly from the Covid-19 pandemic shock. Although indicators point to a more mixed picture in recent months, we do not think that the softness will translate into a prolonged slump in economic activity,” the agency noted.

Fitch remains optimistic, highlighting robust domestic demand as a crucial growth driver amidst global trade challenges.

The agency expects that policy initiatives, including infrastructure development, digitalisation, and business reforms, will continue to bolster growth. 

Additionally, public infrastructure investments and stronger corporate and banking sector balance sheets are expected to support capital spending and sustain economic momentum.

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