Business EconomyPosted at: Jun 9 2026 12:33PM

New Delhi, Jun 9 (UNI) Fitch Ratings has lowered India's GDP growth projection for the current fiscal year to 6.4 per cent from its earlier estimate of 6.7 per cent, saying that the US-Iran war will slow economic activity in the September and December quarters.
Fitch expects economic growth in FY27 to slow from the 7.4 per cent recorded in FY26, as rising prices erode real incomes and dampen consumer spending, despite resilient capital expenditure.
"We expect GDP growth to ease to 6.4 per cent in FY27, a downward revision of 0.3 percentage points from March. Domestic demand will be the main driver of growth, but lower imports in real terms imply positive contributions to growth from net external demand," Fitch Ratings said in its June Global Economic Outlook.
Fitch said the slowdown in the economy will be most apparent in the second and third quarters of FY27, as rising prices resulting from the US-Iran war erode real incomes and dampen consumer spending. Fuel prices have risen by 4-5 per cent in recent weeks.
"The oil price shock is hitting world growth prospects and increasing downside risks. But we are also amid a very pronounced boom in global spending on IT, and that is cushioning the impact on activity in the near term, particularly in Asia," Fitch Chief Economist Brian Coulton said.
For FY28, Fitch expects GDP growth to pick up as the energy shock unwinds, with stronger consumer spending and investment translating into a growth rate of 6.7 per cent for the full financial year. Growth is then expected to ease towards the trend rate of 6.4 per cent in FY29.
Fitch has revised its 2026 average price assumption for Brent crude oil to $87 per barrel, up from the $70 per barrel estimated in March.
It further said that India's consumer price inflation has not yet risen significantly, but price pressures are mounting. Wholesale prices rose by 8.3 per cent year-on-year in April, while CPI inflation increased to 3.5 per cent.
Fitch said it expects inflation to rise steadily in the months ahead, reaching 5.3 per cent by the end of the calendar year. This reflects a combination of base effects and higher energy prices. Forecasts of below-average monsoon rainfall and the current heatwave in parts of India raise the risk of even sharper price increases.UNI VK AAB

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