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Indicating high interest rate and lower fiscal impulse tempering urban demand, S&P Global Ratings has revised down its estimate for India's economic growth in the next two financial years. In an update to its economic forecast for Asia-Pacific economies after US election results, the rating agency projected a 6.7 per cent Gross Domestic Product (GDP) growth rate in 2025-26 financial year (April 2025 to March 2026) and 6.8 per cent in the following fiscal year, down from 6.9 per cent and 7 per cent, respectively in previous projections. For FY25, S&P Global pegged GDP growth rate at 6.8 per cent. It expects India's GDP to grow at 7 per cent in FY28.

It said ‘In India we see GDP growth easing to 6.8 per cent this fiscal year as high interest rates and a lower fiscal impulse temper urban demand. While purchasing manager indices (PMIs) remain convincingly in the expansion zone, other high-frequency indicators indicate some transitory softening of growth momentum due to the hit to the construction sector in the September quarter’.

Besides, S&P retained its growth projection for China at 4.8 per cent in 2024 but cut next year's forecast to 4.1 per cent from 4.3 per cent earlier and to 3.8 per cent in 2026 from the previous estimate of 4.5 per cent. It noted that the impending change in the US administration will be challenging for China and the rest of Asia-Pacific. It also said the Asia-Pacific growth will be impeded by slower global demand and US trade policy. But lower interest rates and inflation should ease their drag on spending power.