Fitch raises India’s FY25 growth forecast to 7.2%

New Delhi (TIP)- Fitch Ratings on Tuesday raised its growth estimates for India by 20 basis points to 7.2 percent — same as that of the Reserve Bank of India (RBI) — citing positive economic outlook driven by recovering consumer confidence and increased investment.
“Investment will continue to rise but more slowly than in recent quarters, while consumer spending will recover with elevated consumer confidence. Purchasing managers survey data point to continued growth at the start of the current financial year. Signs of the coming monsoon season being more normal should support growth and make inflation less volatile, though the recent heatwave poses a risk,” the rating agency said in its latest Global Economic Outlook (GEO).
The Indian economy grew at an impressive rate of 8.2 per cent in FY24, driven by a stronger-than-expected expansion of 7.8 per cent in the fourth quarter.
Fitch said growth in later years may slow and approach its medium-term trend estimate. “We forecast real GDP growth of 6.5 per cent in FY25/26 (unchanged from March), and 6.2 per cent in FY26/27, driven by consumer spending and investment,” it added.
While highlighting the decrease in retail inflation, Fitch acknowledged persistent high food price inflation. “We expect headline inflation to continue declining to 4.5 per cent by calendar year-end, and average 4.3 per cent in 2025 and 2026, staying slightly above the mid-point of its target range,” the rating agency said.
Fitch said it expects the RBI to cut its policy rate this year, but only once, to 6.25 per cent. “In the March GEO, we expected 50bp of cuts this year. We then expect 25bp of cuts in both 2025 and 2026,” it added.
At its latest meeting in May, the RBI maintained the policy rate at 6.5 per cent and confirmed its hawkish stance of “withdrawal of monetary accommodation” and the need to bring down inflation towards the 4 per cent target.
The World Bank last week maintained India’s growth forecast at 6.6 per cent for FY25, affirming the country’s position as the fastest-growing economy among major economies. Meanwhile, the RBI raised its growth projection for FY25 to 7.2 per cent from an earlier estimate of 7 per cent in its last monetary policy review.

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