India set to be Asia's fastest-growing major economy in 2026
What's the story
India is projected to be Asia's fastest-growing major economy in 2026, according to a recent report by Fitch Ratings. The agency expects India's economy to grow by 6.4% in the year, outpacing competitors like the Philippines, Indonesia, and Malaysia. The report highlights that changes in trade patterns will have a minimal impact on economic growth in these countries due to their relatively low manufacturing exports and closed economies.
Trade dynamics
RBI likely to hold policy rate at 5.25%
Fitch Ratings also noted India's efforts to expand its trade relationships beyond the US through various deals, including a recent one with the European Union (EU). The agency said that the impact of US tariffs on India is still uncertain. On the monetary policy front, Fitch expects the Reserve Bank of India (RBI) to maintain its policy rate at 5.25% in the near term after a cut last December.
Fiscal health
Fitch optimistic about India's fiscal transparency
The report also highlights India's improved fiscal transparency with more spending items included in the budget. It credits buoyant revenues from higher growth and the introduction of goods and services tax (GST) for this improvement. Fitch Ratings believes these factors could lead to a gradual decline in government debt over the medium term, although it does expect high debt-to-GDP ratios to persist.