While highlighting that the world growth is projected to fall below two per cent this year, Fitch Ratings has cut India’s gross domestic product (GDP) growth estimate by 10 basis points (bps) to 6.4 per cent for the current financial year, citing concerns over escalating global trade war. It has retained the growth at 6.3 per cent for the fiscal year 2026-27, as per its special report on Global economic outlook, April 2025 update.
In its report, Fitch Ratings stated that the United States (US) annual growth is expected to remain positive at 1.2 per cent for 2025 but will slow to a crawl through the year at just 0.4 per cent year-on-year (YoY) in Q425. China’s growth is expected to fall below four per cent both this year and next, while growth in the eurozone will remain stuck well below one per cent.
“Fitch Ratings’ forecasts for world growth have been sharply lowered in response to the recent severe escalation in the global trade war. This special update to our quarterly Global Economic Outlook (GEO) cuts world growth in 2025 by 0.4 percentage points (pp) and China and US growth by 0.5pp from our March GEO,” the special report highlighted.
Tariff escalation will hit US-China trade flows dramatically. With limited scope for import substitution or trade diversion in the near term, the report added that the adverse supply shock in the US could be marked. Fitch Ratings stated that its US inflation forecast has been revised up to over four per cent, implying a stagnation in real wages.
“China’s economy has grown faster than expected over the past year, but net trade has accounted for a third of GDP growth. This will slow sharply as exporters struggle to redirect sales in the near term. China’s housebuilding slump and deflationary pressures are continuing, but we expect fiscal and monetary policy easing to be stepped up,” it added.
The report added that World growth is projected to fall below two per cent this year, which would be the weakest global growth rate since 2009, excluding the pandemic.