Fitch Ratings Adjusts Global and Indian Growth Projections Amid Trade War Tensions

Fitch Ratings has lowered India's GDP growth estimate for the current fiscal year by 10 basis points to 6.4% due to concerns about an escalating global trade war. The world, China, and US growth projections have also been reduced, and global growth is predicted to fall below 2% this year.

Fitch Ratings has slashed India's GDP growth estimate by 10 basis points, bringing it down to 6.4% for the ongoing fiscal year. This move comes amidst heightening fears over a severe escalation in the global trade war.

The ratings agency expressed concerns over the unpredictability of US trade policy, which continues to cast a shadow over business investment prospects. The uncertainty is also influencing equity prices, household wealth, and the retaliatory impact on US exporters.

In a special update to its quarterly Global Economic Outlook, Fitch downgraded world growth projections for 2025 by 0.4 percentage points and for China and the US by 0.5 percentage points compared to its March outlook.

Regarding growth rates, the US is expected to maintain a positive rate of 1.2% for 2025, while China's growth is predicted to dip below 4% both this year and next. The eurozone is projected to see growth stagnate below 1%.

The increased tariffs, part of the US 'Liberation Day' moves, surprise despite being recently paused. The effective tariff rate (ETR) average in the US is at its highest since 1909, currently pegged at 23%.

Fitch also suggests the US ETR on China will remain elevated above 100% before eventually declining to 60% by 2026, holding the US ETR on other trade partners at 15%.

(With inputs from agencies.)