Context:
S&P Global Ratings on Tuesday revised India’s GDP growth forecast for FY26 to 6.5%, up by 0.2 percentage points from its previous estimate. The upgrade was published in its latest Economic Outlook for Asia-Pacific (Q3 2025).
Key Assumptions Driving the Forecast
- Normal monsoon
- Lower crude oil prices
- Income tax concessions
- Monetary policy easing
Focus on Domestic Demand
The report underlined that strong domestic demand would help limit the slowdown in India’s overall GDP growth, in contrast to export-dependent economies in the region which may face greater challenges due to softening global trade.
S&P noted
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- Export growth could be constrained by weak external demand.
- Risks to global growth have risen due to geopolitical turbulence in West Asia.
- However, long-term spikes in oil prices are unlikely under current market conditions.
Background and Global Context
In May 2025, S&P had lowered India’s FY26 growth forecast to 6.3%, citing uncertainty stemming from U.S. tariff policy and its spillover effects on global trade. That report, titled Global Macro Update: Seismic Shift in US Trade Policy Will Slow World Growth, warned of rising protectionism and its negative impact on global supply chains.
Global Forecasts
- World Bank (June 2025): Maintained India’s FY26 growth forecast at 6.3% amid rising trade barriers.
- IMF (April 2025): Lowered India’s FY26 forecast by 30 bps to 6.2%, citing trade tensions and global uncertainty.
