S&P Global Ratingshas reduced India’s GDP growth projection to 6.3 per cent for 2025-26, marking a 20 basis points decrease, whilst the forecast for 2026-27 has been lowered by 30 basis points to 6.5 per cent.It had earlier adjusted India’s growth outlook for 2025-26 downward to 6.5 per cent from 6.7 per cent.
The Reserve Bank of India has also revised its growth forecast downward for fiscal 2025-26 to 6.5 per cent from 6.7 per cent, citing trade-related uncertainties following the US announcement of reciprocal tariffs.
During his second term, President Donald Trump has maintained his position on tariff reciprocity, stating that the US will implement matching tariffs on countries including India to ensure balanced trade. The implementation has been suspended for 90 days as various nations engage with the US administration for trade negotiations.
S&P has additionally reduced growth forecasts for numerous major economies including the US, Canada, Europe, Germany, Italy, the UK, China, and Japan.
The US economy is projected to experience a decline of approximately 60 basis points in GDP growth during 2025-2026, with Canada and Mexico facing similar reductions.
Among major Asia-Pacific economies, China’s growth is expected to decrease by 0.7 percentage points in 2025-2026, whilst Japan and India are projected to see declines between 0.2 and 0.4 percentage points.
S&P’s Global Macro Update highlights how changes in American trade policies have created market instability and raised concerns about worldwide economic deceleration. “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 argued.
S&P has revised its economic outlook, including projections for GDP expansion, inflation rates and recession probability assessments.
“The jump in US import tariffs, trading partner retaliation, ongoing concessions, and subsequent market turbulence constitute a shock to the system centered on confidence and market prices. The real economy is sure to follow, but by how much?” stated Paul Gruenwald, S&P Global Ratings Global Chief Economist.
Despite heightened downside risks across regions, S&P maintains that significant growth deceleration is unlikely.
“We do not foresee a US recession at this juncture,” according to S&P.
“The risks to our baseline remain firmly on the downside in the form of a stronger-than-anticipated spillover from the tariff shock to the real economy. The longer-term configuration of the global economy, including the role of the U.S., is also less certain,” Gruenwald noted.
