Major global institutions have raised India’s FY27 GDP growth forecasts after stronger-than-expected economic performance. However, elevated energy costs, inflation and geopolitical uncertainty remain key risks.
Highlights
- S&P Global Ratings and ADB raised India’s FY27 GDP growth forecast to 7%.
- Fitch Ratings upgraded its projection to 6.9%, while OECD raised its estimate to 7.1%.
- Moody’s Ratings has also raised its India growth forecast to 7%.
- These projections are above the RBI’s current 6.7% FY27 growth forecast.
New Delhi: India’s economic outlook for FY27 has strengthened, with several major global institutions raising their GDP growth forecasts following stronger-than-expected economic performance.
S&P Global Ratings and the Asian Development Bank (ADB) have raised their FY27 growth projections by 40 basis points each to 7%. Fitch Ratings increased its forecast by 50 basis points to 6.9%.
The biggest revision came from the Organisation for Economic Co-operation and Development (OECD), which lifted its India growth forecast to 7.1% from 6.3% earlier. Moody’s Ratings has also increased its projection to 7% from 6%.
The revised forecasts from these institutions are higher than the Reserve Bank of India’s current projection of 6.7% growth for FY27. The RBI is expected to review its forecast in October.
The upgrades come after India’s economy expanded by a stronger-than-expected 7.8% during the April-June quarter. Despite the stronger start, the agencies expect economic activity to moderate during the second half of the current financial year.
According to the report, Fitch pointed to strong GDP growth in the April-June quarter as evidence of the Indian economy’s resilience amid external shocks.
ADB expects resilient consumption, healthy investment and strong services exports to support growth. However, higher energy costs and a weaker monsoon could create pressure on the economy.
Inflation is another factor to watch. S&P and ADB expect FY27 retail inflation at around 5%, while OECD projects 4.7%. Fitch expects inflation to ease towards the RBI’s 4% target.
The outlook for interest rates also differs. S&P expects a 25-basis-point repo rate cut in FY27, while Fitch expects a 25-basis-point hike in October.
