India's Economic Outlook Dims as S&P Adjusts Growth Forecasts

S&P Global Ratings has once again revised India's GDP growth projection downward, this time to 6.3 per cent for 2025-26, a decrease of 20 basis points. The forecast for 2026-27 has also been adjusted to 6.5 per cent, down by 30 basis points.

Global Economic Shifts Prompt Revisions

The Reserve Bank of India has similarly lowered its growth forecast for fiscal 2025-26 to 6.5 per cent, attributing the adjustment to trade-related uncertainties following the US's announcement of reciprocal tariffs. President Donald Trump's stance on tariff reciprocity has introduced a layer of unpredictability, with the US set to implement matching tariffs on India and other nations, though negotiations are currently underway during a 90-day suspension period.

Wider Implications of US Trade Policy Changes

S&P's revisions are not limited to India; growth forecasts for major economies including the US, Canada, Europe, Germany, Italy, the UK, China, and Japan have also been reduced. The US economy, in particular, is expected to see a GDP growth decline of approximately 60 basis points in 2025-2026.

Market Instability and Economic Slowdown Fears

According to S&P's Global Macro Update, changes in American trade policies have sparked market instability and heightened concerns over a potential global economic slowdown. "A seismic shift in US trade policy has added to the uncertainty that has roiled markets and raised the specter of a global economic slowdown," S&P noted.

Looking Ahead: Economic Resilience Amid Uncertainty

Despite the heightened risks, S&P remains cautiously optimistic, stating that a significant growth deceleration is unlikely and that a US recession is not anticipated at this time. However, the long-term configuration of the global economy, including the role of the US, remains uncertain.