S&P Global Ratings Revises India's FY26 GDP Growth Forecast Downward to 6.3%.
Economy Business
On May 2, 2025, S&P Global Ratings (formerly Standard & Poor’s) released its report titled "Global Macro Update: Seismic Shift in US Trade Policy Will Slow World Growth". In this report, the agency revised India’s GDP growth forecast for FY26 to 6.3%, a downward revision of 20 basis points (bps) from its earlier estimate of 6.5% made in March 2025.
- The downgrade was attributed to rising uncertainties caused by the United States’ new tariff policies and the potential global repercussions. S&P warned that these trade disruptions could negatively affect global confidence, supply chains, and overall economic momentum.
- India’s GDP growth projection for FY27 has also been revised downward to 6.5%, reflecting a 30 bps reduction from the earlier forecast of 6.8%. This shows a continued concern over medium-term growth due to evolving global economic conditions.
- The report highlighted that increased US import tariffs and potential retaliatory actions by affected countries have introduced major risks to global trade, threatening to destabilize markets and slow economic recovery efforts globally.
Main Point :- (i) S&P also forecasted that the Indian Rupee (INR) could weaken against the US Dollar, projecting the exchange rate to reach INR 88/USD by the end of 2025, compared to INR 86.64 in 2024. This anticipated depreciation is influenced by trade volatility and foreign exchange market pressures.
(ii) Globally, S&P cut its economic growth projections by 30 bps for both 2025 and 2026. The agency now expects global GDP to grow at 2.2% in 2025 and 2.4% in 2026, which would represent the weakest pace of expansion since the global financial crisis, excluding the COVID-19 years.
(iii) In April 2025, several major institutions revised their GDP growth forecasts for India for FY26 in response to growing global trade tensions. The International Monetary Fund (IMF) reduced its projection by 30 basis points (bps) to 6.2%, while the World Bank (WB) lowered its estimate by 40 bps to 6.3%. Similarly, the Reserve Bank of India (RBI) trimmed its forecast to 6.5%, marking a 20 bps cut, reflecting cautious optimism amid global economic uncertainties.
About S&P Global Ratings
President - Vann Le Pallec
Headquarters : New York
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