S&P lowered growth projections for several major economies alongside India. The U.S. is expected to experience a GDP growth decline of about 60 basis points over 2025-2026
S&P Global Ratings has cut India’s GDP growth forecast for 2025-26 by 20 basis points to 6.3 per cent, and for 2026-27 by 30 basis points to 6.5 per cent. The agency had previously reduced India’s 2025-26 forecast to 6.5 per cent from 6.7 per cent. The Reserve Bank of India (RBI) also revised its growth estimate for 2025-26 to 6.5 per cent, down from an earlier projection of 6.7 per cent. These downgrades come amid rising concerns over global trade instability following reciprocal tariffs proposed by the United States under President Donald Trump’s tariff reciprocity policy.
Trump’s Tariff Policy Raises Global Trade Tensions
President Donald Trump, in his second term, reaffirmed his commitment to tariff reciprocity, stating that the U.S. will match tariffs imposed by other nations, including India. “Fair trade” remains a key objective, according to Trump. The U.S. administration has paused the implementation of new tariffs for 90 days, during which several countries, including India, have engaged in discussions to explore possible trade agreements.
Global Growth Forecasts Revised Downward
S&P lowered growth projections for several major economies alongside India. The U.S. is expected to experience a GDP growth decline of about 60 basis points over 2025-2026. Canada and Mexico will also see similar reductions. In Asia-Pacific, S&P projects China’s GDP growth to fall by 0.7 percentage points during the same period. Japan and India are forecasted to see a 0.2–0.4 percentage point drop in GDP growth.
S&P Warns of Confidence Shock to Global Economy
“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 stated in its Global Macro Update. The agency noted that the impact of tariff hikes, retaliatory measures, and ongoing market volatility “constitute a shock to the system centered on confidence and market prices.”
Risks Skewed to the Downside, Says S&P
S&P Global Ratings Global Chief Economist Paul Gruenwald said, “The real economy is sure to follow, but by how much?” He added, “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.” However, S&P clarified, “We do not foresee a US recession at this juncture.”
(With Inputs From ANI)
