Fitch cuts India growth estimates to 6.4% amid ongoing global trade war

Fitch Ratings has revised India's GDP growth forecast for the current fiscal year 2025-26, trimming it by 10 basis points to 6.4%, citing escalating global trade tensions. The outlook for 2024-25 was also cut to 6.2%, while the estimate for 2026-27 remains unchanged at 6.3%.

In its latest Global Economic Outlook (GEO) update, Fitch warned that the intensifying global trade war particularly between the US and China is weighing heavily on investment, equity markets, and export prospects. "Massive policy uncertainty is hurting business investment prospects, equity price falls are reducing household wealth, and US exporters will be hit by retaliation," the agency noted.

Fitch also slashed its global growth forecast for 2025 by 0.4 percentage points and downgraded the US and China’s projections by 0.5 percentage points. The firm now expects global GDP growth to dip below 2% this year excluding the pandemic years, the weakest level since 2009.

The downgrade comes amid concerns over recent aggressive tariff hikes by the US, dubbed “Liberation Day” measures. Although the initial shock was tempered by a temporary 10% universal tariff, the move triggered a wave of retaliatory actions, pushing US-China bilateral tariff rates beyond 100%.

Meanwhile, Fitch expects US GDP to grow at 1.2% in 2025, while China's growth is likely to remain below 4% over the next two years. Growth in the eurozone is projected to stagnate at under 1%, further highlighting the risks facing global economic recovery.