New Delhi, 09 June (H.S.): Global rating agency Fitch Ratings has revised downward its forecast for India’s Gross Domestic Product (GDP) growth for the financial year 2026-27, reducing it from 6.7 per cent to 6.4 per cent amid the ongoing crisis in West Asia. The agency lowered its previous estimate by 0.3 percentage points, citing a sharp rise in crude oil prices.
In its June Global Economic Outlook report released on Tuesday, Fitch Ratings stated that India’s economic growth is likely to moderate during the current financial year, although domestic demand and investment are expected to provide some support. The agency projected that GDP growth would slow to 6.4 per cent, 0.3 percentage points lower than its March forecast.
The report noted that domestic demand would remain the principal driver of economic expansion, while lower imports in real terms would allow net external demand to make a positive contribution to growth.
According to the report, elevated inflation and rising energy prices are expected to exert pressure on real incomes, thereby affecting consumer spending. The impact is likely to be most pronounced during the second and third quarters of FY 2026-27.
Fitch Ratings observed that the ongoing conflict between the United States and Iran has driven global oil prices higher, affecting both the Indian and global economies. The agency raised its forecast for the average price of Brent crude oil to US$87 per barrel, up from its earlier estimate of US$70 per barrel.
The report further stated that the Strait of Hormuz, which has reportedly remained closed for the past 14 weeks due to the West Asia crisis, is expected to remain shut until July.
Despite these developments, Fitch said inflation in India has not yet accelerated sharply, although upward pressure is building. Wholesale inflation stood at 8.3 per cent in April, while retail inflation was recorded at 3.5 per cent.
The rating agency projected that inflation could rise to 5.3 per cent by the end of the year, driven by higher energy costs, base effects and the possibility of a weaker monsoon season.
Last week, the Reserve Bank of India (RBI) maintained its real GDP growth forecast for FY 2026-27 at 6.6 per cent. According to official government data, the Indian economy expanded by 7.7 per cent during the financial year 2025-26.
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Hindusthan Samachar / Jun Sarkar
