Robust Indian growth outlook amid Middle East conflict, Fitch updates forecast

Fitch Ratings upgraded its FY27 growth estimate for India to 6.9 percent, emphasizing the country’s strong performance despite worldwide energy price spikes caused by the war in the Middle East. The agency noted that India’s actual growth has significantly outpaced the numbers projected in its June Global Economic Outlook, prompting a 50‑basis‑point upward adjustment.

Real GDP grew at an annualised 7.8 percent in the April‑June quarter, following an 8.6 percent surge in the previous three‑month period. This momentum also lifted the FY26 growth projection from 7.4 to 7.8 percent.

Fitch warned that the remainder of the fiscal year could see a tapering of expansion as PMI data points to slower growth in manufacturing and services, and that a weaker monsoon may impact agricultural output and rural demand.

Rising inflation is likely to squeeze disposable incomes, which could slow consumer expenditure growth to about 5.7 percent in FY27, compared with 7.2 percent a year earlier. The agency still expects GDP growth to settle around 6.5 percent for FY28 and FY29 as investment and consumption stay resilient.