Fitch lowers India's and global growth forecast amidst trade uncertainties

The Reserve Bank of India also recently lowered the growth forecast for the current fiscal 2025-26 to 6.5 per cent from 6.7 per cent, amid uncertainties arising from trade wars following the reciprocal tariffs announced by the US.

The global rating agency has similarly revised downwards growth rates for several economies, including France, the UK, Eurozone, Australia, Canada, Germany, China, the US, among a few others.

Fitch Ratings' forecasts for world growth have been sharply lowered in response to the recent severe escalation in the global trade war.

"US 'Liberation Day' tariff hikes were far worse than expected," said Fitch.

"Massive policy uncertainty is hurting business investment prospects, equity price falls are reducing household wealth and US exporters will be hit by retaliation," it added.

The Fitch quarterly Global Economic Outlook (GEO) cuts world growth in 2025 by 40 basis points and China and US growth by 50 basis points.

US annual growth is expected to remain at 1.2 per cent for 2025 but will slow to a crawl through the year at just 0.4 pere cent in October-December 2025.

China's growth is expected to fall below 4 per cent both this year and next, while growth in the eurozone will remain stuck well below 1 per cent.

World growth is projected to fall below 2 per cent this year; excluding the pandemic, this would be the weakest global growth rate since 2009.

In the US, Fitch expects the Federal Reserve to wait until October-December 2025 quarter before cutting rates despite the deteriorating US growth outlook.

"Import prices are set to rise sharply and there has been an alarming jump in US households' medium-term inflation expectations in the past two months. However, the surprising weakening of the US dollar has created more space for other central banks to ease and we now expect deeper rate cuts from the ECB and in emerging markets," Fitch said. (ANI)