New Delhi: Riding on robust domestic demand, Goods and Services (GST) rate rationalisation and income tax reforms, India’s GDP growth is set to hold steady at 6.5 per cent this fiscal (FY26), a report by S&P Global said on Tuesday.
The report expects domestic demand to remain strong, supported by a largely benign monsoon season, cuts in the income and the GST tax and accelerating government investment.
“GDP growth in the June quarter was better than we expected at 7.8 per cent,” according to the S&P Global ‘Q4 Asia Pacific Economic Outlook’.
For India, “we have revised our inflation forecast down to 3.2 per cent for this fiscal year after a sharper than expected decrease in food inflation”.
This leaves room for further monetary policy adjustments and we anticipate a 25 bps rate cut by the Reserve Bank of India (RBI) this fiscal year.
In the Asia-Pacific region, investment has been particularly buoyant in India and the strength stems from government investment. Domestic demand has also remained resilient, especially in emerging markets.
When it comes to China, overall exports held up through August even as shipments to the US plunged. In August, they were down 33 per cent on a year ago, in US dollar terms. Exports to other destinations have grown robustly, especially to the ASEAN region.
“We expect exports to slow meaningfully in coming months on higher US tariffs and slowing global growth. While higher-than-expected U.S. tariffs on other economies support China’s relative position in the US, its exporters face much higher US tariffs under the Trump administration,” the report mentioned.
After a solid start to the year for domestic demand, both consumption and investment have slowed in China. The continuing slide in housing sales depresses housing investment as well as confidence and thus consumption.
“We expect China’s economy to slow to about 4 per cent year-on-year in the second half of 2025 and 2026 on weakening exports, tepid organic domestic demand, and contained macro stimulus. Downward pressure on prices will persist,” the report noted.
Across Asia-Pacific, relatively resilient domestic demand should dampen the impact from stronger external headwinds following the increase in US import tariffs and slower global growth.
(IANS)
