Morgan Stanley warns $150 oil cuts India growth to 5.7%
Morgan Stanley just dropped a report warning that if oil prices jump to $150 a barrel, even for a few months, India's economic growth could take a real hit, dropping to 5.7% in fiscal 2027.
That would be the slowest pace since the pandemic, with inflation likely rising above RBI's comfort zone and the country's current account deficit getting wider to about 3% of GDP.
Morgan Stanley trims FY2027 growth forecast
The bank has already trimmed its fiscal 2027 growth forecast from 6.5% to 6.2%, expecting oil to stay pricey due to global tensions.
Meanwhile, the government might step in with subsidies or tax cuts to soften the blow, even if it means running up a bigger fiscal deficit than planned.
Despite all this, Morgan Stanley expects RBI to keep interest rates steady and let fiscal policies do most of the heavy lifting.