World Bank upgrades India's FY27 growth outlook to 6.6%
What's the story
The World Bank has revised India's growth forecast for the fiscal year 2026-27 to 6.6%, up from the earlier estimate of 6.3% made in October last year. The revision is based on strong domestic demand and export performance, despite the global economic uncertainty due to conflict in West Asia. For FY2025-26, India's economy is projected to grow by a robust 7.6%, driven by strong consumption and an investment recovery, according to the World Bank's latest South Asia Economic update.
Economic alignment
RBI's growth projection aligns with World Bank's forecast
The Reserve Bank of India (RBI) has also projected a growth rate of 6.9% for FY27, closely matching the World Bank's revised forecast. This consensus suggests that India's economy is likely to remain resilient in the face of global challenges. However, the World Bank has warned that the ongoing West Asia conflict and its effects on energy markets could temper growth by fueling inflation and tightening financial conditions.
Economic challenges
Report warns of inflation risks, rising input costs
In India, strong demand, normalizing food prices, and higher energy prices are expected to push inflation up in FY27, the report said. Investment growth is also likely to slow amid heightened uncertainty and rising input costs. As per the report, India's trade prospects could improve with better access to markets like the US and EU. However, weaker growth in major trading partners may offset some of these gains.
Regional impact
South Asia's GDP growth to slow, but India will lead
The World Bank predicts South Asia's GDP growth will slow to 6.3% in 2026 from 7% in 2025, mainly due to global energy market disruptions. Despite this slowdown, the region is expected to outpace other emerging-market and developing economies, with India leading the way. Johannes Zutt, World Bank VP for South Asia, stressed that policy reforms are crucial for sustaining growth and creating jobs in this challenging global environment.