New Delhi, May 22, 2025 — In a significant development that highlights shifting dynamics in the global economy, Fitch Ratings has revised India's GDP growth forecast upward by 0.2 percentage points to 6.4% for the fiscal year 2025. Meanwhile, China’s economic growth projection has been cut by 0.3 percentage points, reflecting mounting challenges for the world’s second-largest economy.
India’s Economic Momentum Strengthens
Fitch Ratings cited strong domestic demand, robust government spending, and improving investment sentiment as key drivers behind India’s upward revision. The agency noted that despite global uncertainties and inflationary pressures, the Indian economy continues to show resilience with consistent performance across sectors, particularly in services, manufacturing, and infrastructure development.
"India’s growth trajectory remains among the strongest globally, supported by macroeconomic stability, reforms, and a diversified growth base," Fitch stated in its latest Global Economic Outlook report.
China’s Economic Headwinds Intensify
In contrast, China's growth forecast has been downgraded to reflect ongoing challenges including a slowdown in property markets, weakening export demand, and lingering effects of structural reforms. The revised estimate underscores concerns over China’s ability to maintain momentum amid geopolitical tensions and internal economic rebalancing.
Fitch emphasized that “policy support measures in China have not fully offset the softness in key sectors,” pointing to a cautious outlook for the remainder of 2025.
Asia’s Diverging Growth Paths
The contrasting revisions for Asia’s two largest economies point to diverging economic narratives. While India is benefiting from policy reforms such as the Production Linked Incentive (PLI) schemes, digital transformation, and increased capital expenditure, China is grappling with debt risks, demographic pressures, and weak consumer confidence.
Analysts believe India’s improved growth outlook could attract more global investments, especially as companies diversify supply chains away from China. This trend may further solidify India’s position as a fast-growing alternative in Asia.
Global Implications
The revised forecasts also have implications for global markets. India’s growing contribution to global GDP, coupled with a steady inflation outlook, may offer stability in an otherwise volatile economic landscape. Conversely, China’s economic cooling could weigh on global commodity demand and trade flows.
Looking Ahead
As India gears up for the second half of 2025, economists anticipate continued policy support and structural reforms to sustain growth momentum. The Reserve Bank of India (RBI) is expected to maintain a balanced approach, ensuring inflation control while fostering economic expansion.
Fitch’s latest update reaffirms India’s position as a key engine of global growth, even as other major economies face persistent headwinds. With continued focus on infrastructure, digitalization, and inclusive development, India appears well-placed to navigate the challenges and seize emerging opportunities.
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