World Bank revises India's growth forecast to 6.6% for FY27
What's the story
The World Bank has revised India's growth forecast for the fiscal year 2027, raising it from an earlier estimate of 6.3% to a more optimistic 6.6%. The revision reflects strong domestic demand and robust export performance despite headwinds from the ongoing Middle East conflict. For FY26, the economy is projected to grow by a healthy 7.6%, up from last year's estimate of 7.1%.
Economic outlook
RBI's growth projection and inflation concerns
The Reserve Bank of India (RBI) has projected a slightly higher growth rate of 6.9% for FY27. The World Bank report also noted that GST cuts are likely to boost consumer demand in early FY27. However, high global energy prices could raise inflation and restrict household spending power. In India, strong demand, normalizing food prices, and higher energy prices are expected to push inflation up in FY27, the report said.
Market dynamics
Investment slowdown and trade growth challenges
The World Bank report also highlighted that investment growth is likely to slow amid rising uncertainty and input costs. While India's exports could benefit from improved access to markets such as the US and EU, weaker growth in major trading partners may temper these gains. Over the long term, trade growth is expected to be supported by free trade agreements (FTAs).
Regional impact
South Asia's GDP growth forecast
Across South Asia, GDP growth is projected to slow down to 6.3% in 2026 from last year's 7%. This slowdown is mainly due to disruptions in global energy markets. Despite this near-term slowdown, the region is tipped to outpace other emerging-market and developing economies with India continuing as the primary driver of growth. Strong domestic demand, tariff reductions, and recent trade agreements are key contributors to this outlook.