S&P projects GDP growth of 6.7 percent in the 2025-26 fiscal year (April 2025 to March 2026) and 6.8 percent in the next fiscal year, up from 6.9 percent and 7 percent in the previous forecasts, respectively.
S&P Global Ratings on Monday cut its forecast for India’s economic growth over the next two fiscal years due to higher interest rates and lower fiscal stimulus, driven by urban demand. In an update of its economic forecast for Asia-Pacific economies following the US election results, the rating agency projected GDP growth of 6.7 percent in the 2025-26 fiscal year (April 2025 to March 2026) and 6.8 percent in the following fiscal year. , down from 6.9 percent and 7 percent, respectively, in the previous estimates.
For FY25, S&P Global projected a GDP growth rate of 6.8 percent.
“In India we see GDP growth decelerating to 6.8 percent this fiscal due to urban demand driven by higher interest rates and lower fiscal stimulus. While Purchasing Managers’ Indexes (PMIs) remain firmly in the expansion zone, other high-frequency indicators suggest some temporary softening in the pace of growth due to the hit to the construction sector in the September quarter,” it said.
The agency expects India’s GDP to grow at 7 percent in FY28.
S&P maintained its growth forecast for China in 2024 at 4.8 percent but cut next year’s forecast to 4.3 percent to 4.1 percent from 4.5 percent previously and 3.8 percent in 2026.
“The impending change in the US administration will be challenging for China and the rest of Asia-Pacific. US tariff hikes have become more likely, especially on China, and possible changes in the US macro picture are driving interest rate expectations,” ‘Economic Outlook Asia- Pacific Q1 2025: US Trade Shift Blurs the Horizon’ said the report.
S&P Global Ratings Asia-Pacific Chief Economist Louis Kuijs said rising risks are clouding the economic outlook for Asia-Pacific in the first quarter of 2025. Be careful not to cut their policy rates too quickly.” China’s stimulus measures should support growth, but S&P expected its economy to be hit by US trade tariffs on its exports.
Asia-Pacific growth will be constrained by sluggish global demand and US trade policy. But low interest rates and inflation should ease the drag on their spending power.