Dun & Bradstreet Lowers FY2025-26 GDP Growth Forecast: Economic Challenges Ahead

Mumbai, May 12, 2025: Dun & Bradstreet, a global leader in business decisioning data and analytics, has released its Economy Observer report for May 2025. Economy Observer is a monthly report sharing in-depth analysis of key macroeconomic developments in India and provides forecasts for key economic indicators, and insight into the expected direction of the Indian economy.

Key economic forecast:

Real Economy: Dun & Bradstreet has revised its GDP growth forecast for 2025-26 to 6.3% from 6.8%, reflecting rising global uncertainties and external headwinds such as U.S. tariff pressures and ongoing trade tensions that continue to weigh on exports and private investment. However, the Reserve Bank of India’s shift in policy stance to 'accommodative', coupled with the potential for further rate cuts, signals a proactive effort to stimulate domestic demand. At the same time, domestic factors, liquidity conditions, and some positive performing sectors as reflected in the recent Index of Industrial Production (IIP) data are expected to offer partial support.  In this context, Dun & Bradstreet projects a moderate improvement in the IIP to 3.2% in April from 3.0% in March, despite ongoing weakness in manufacturing and mining.

Price Scenario: In April 2025, India's inflation outlook remains favorable, with both retail and wholesale price pressures expected to ease. Dun & Bradstreet forecasts CPI inflation to moderate to 2.8% in April down from 3.3% in March, supported by steady rural consumption driven by welfare measures, that have bolstered agricultural output and rural demand. On the wholesale front, WPI inflation is projected to decline to 1.3% in April, from 2.0% in March, reflecting muted input cost pressures and soft global commodity prices, despite recent volatility in metal markets. While copper prices have surged and other base metals exhibit mixed trends, these are expected to have a more pronounced impact on future inflation and industrial cost structures rather than immediate wholesale price inflation. Overall, the inflation trajectory appears benign in the near term, underpinned by supportive domestic factors and a stable supply outlook.

Money & Finance: India’s financial markets in April 2025 reflect a softening interest rate environment, supported by easing inflation, stable borrowing costs, and cautious credit dynamics. Dun & Bradstreet’s forecast of the 10-year G-Sec yield moderating to 6.7%, 91-day T-Bill yield holding at 6.5%, and bank credit growth rising to 11.5% in April from 11% in March is driven by the RBI’s continued monetary easing—marked by a second consecutive 25 bps repo rate cut to 6.00%—and improving macroeconomic stability. Despite the current liquidity deficit, as evidenced by the muted response to the ?1.5 trillion VRR auction, which attracted only ?25,431 crore in bids. The RBI’s ?40,000 crore OMO purchase further supports liquidity, reinforcing expectations of a gradual recovery in credit and investment activity.

External Sector: In March 2025, the INR/USD exchange rate strengthened to 86.6, Dun & Bradstreet’s forecasts pointing to further appreciation to 85.8 in April and 85.2 by May, supported by easing global inflation and reduced capital outflows. The Reserve Bank of India’s strategic interventions have helped stabilize the currency despite global financial market volatility, and speculation in currency markets. A narrower trade deficit of USD 12.5 billion in April, due to lower non-essential imports, along with ?14,670 crore in net FII inflows, has further improved the balance of payments and reinforced investor confidence, strengthening the rupee.

Arun Singh, Global Chief Economist, Dun & Bradstreet said, “India’s macroeconomic near-term outlook signals cautious optimism, with the RBI steering a delicate balance between growth and macroeconomic stability. Prospects for the manufacturing sector appear strong, with expectations of a shift in demand from U.S. firms moving away from China toward India. Inflation is low because of weak commodity prices, allowing the RBI to cut the repo rate again in April. This will further boost domestic demand, which is already supported by steady rural consumption. India’s recovery will hinge on sustained policy support and the stabilization of the global economic landscape. The path forward, while not without risks, is marked by underlying structural strength and policy agility.”

*Weekly Average ** Dun and Bradstreet Forecasts."