S&P Global Ratings has revised India’s GDP growth forecast for the fiscal year 2025-26 downward to 6.3%, citing rising concerns over the ripple effects of the United States’ shifting tariff policies. The global ratings agency emphasized the broader risk to global economic stability, stating that escalating protectionism poses no long-term winners.
This marks the second consecutive downgrade, following a March revision to 6.5% from an earlier estimate of 6.7%. S&P highlighted that India, like many economies in the Asia-Pacific region, is exposed to global trade tensions. China’s growth is expected to slow more sharply, dropping to 3.5% in 2025 and 3% in 2026.
The report, titled “Global Macro Update: Seismic Shift in US Trade Policy Will Slow World Growth,” warns that the potential spillover from the U.S. tariff policies could further strain financial markets and weigh on economic momentum. Although current effects are largely limited to declines in market sentiment and asset prices, early signs of real economic impact—such as a dip in Chinese goods shipments—are emerging.
S&P also projected that the INR/USD exchange rate could weaken to 88 by end-2025, reflecting ongoing volatility triggered by global trade shifts. Meanwhile, India’s economic indicators like the manufacturing PMI remain robust, touching a 10-month high in April, suggesting domestic resilience amid external pressures.