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Better monsoon outlook pushes S&P to lift India GDP forecast to 6.5%
- S&P Global lifts India's GDP forecast to 6.5% for fiscal 2026 citing a good start to 2025 due to robust domestic demand.
- The forecast assumes factors like a normal monsoon, lower crude oil prices, income-tax concessions, and monetary easing.
- India’s GDP growth is expected to be supported by private consumption, traction in fixed capital formation, and the rural and services sectors.
- Trade policy uncertainty and geopolitical tensions are seen as downside risks to growth.
- The Monetary Policy Committee (MPC) also projects a 6.5% real GDP growth for 2025-26, with risks evenly balanced.
- Inflation forecast for FY 26 is reduced to 3.7%, with retail inflation at 2.82%, a 75-month low.
- Core inflation is rising, but agencies are not adjusting the headline inflation number significantly.
- Global energy price falls and currency appreciation against the USD are expected to dampen price increases ahead.
- In India, falling food inflation helps contain headline inflation, while redirected exports away from the U.S. are expected to impact price increases.
- S&P Global mentions that inflation has generally receded in the region, even as some countries experienced rising core inflation.
- The agency highlights significant external pressure on Asia Pacific economies due to U.S. tariff policy uncertainty and soft imports in China.
- China's GDP growth is projected to be 4.3% in 2025 and 4% in 2026, with U.S. tariffs impacting exports but resilient domestic demand expected to mitigate slowdown.
- These projections are published on June 24, 2025.
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