Global ratings agency S&P Global on Wednesday raised India’s GDP growth forecast for the financial year 2026-27 by 40 basis points to 7.1%, signaling confidence in the country’s economic momentum despite global uncertainty.
S&P Global forecasts 6.7% for FY27 in its earlier outlook, reported around November-December 2025.
“We forecast real GDP (gross domestic product) growth to moderate to 7.1% in the fiscal year ending March 2027, compared to 7.6% in fiscal 2026. Key factors are resilient private consumption, a modest recovery in private investment and solid exports,” the agency said in its latest quarterly commentary on the Asia-Pacific economy.
“However, downside risks prevail, primarily due to renewed geopolitical tensions and lingering trade-related uncertainty. These risks could affect India through fluctuations in commodity prices, trade volumes and capital flows,” the agency added.
The rating agency also updated its forward-looking projections, raising FY28 growth by 20bps to 7.2% and FY29 growth by 20bps to 7.0%, pointing to sustained expansion over the medium term. On the policy front, the Reserve Bank of India is expected to keep interest rates unchanged and maintain a neutral stance in the base case as it balances growth and inflation dynamics.
Given current energy supply conditions, fuel prices in countries such as Japan and India are likely to increase if global oil prices remain high as governments may cut subsidies. However, the full transfer of higher costs to consumers is unlikely. In addition, ongoing tensions in the Middle East are expected to put pressure on regional economies, particularly those that are heavily dependent on energy imports from the region.
“Higher energy prices are eroding purchasing power and reducing domestic demand. In countries such as India, Indonesia, Japan, Malaysia and Thailand, higher prices will force higher subsidy spending and thus strain fiscal positions,” he said.
The agency expects inflation in India to rise to 4.3% in fiscal 2027 as it normalizes from low levels. “Higher oil prices are likely to widen the trade deficit, but a healthy surplus in services trade should help narrow the current account deficit. Overall, we expect the central bank to keep rates steady and maintain a neutral stance,” she said, while expecting one rate hike of 25 basis points in the second half.
When we talked about the impact of the war in the Asia-Pacific region, he said that GDP growth would be 0.3-0.4 percentage points lower in China, India and Japan in 2026 and widen to 0.5-0.7 points by the end of the year. In addition to macroeconomic impacts, “the negative energy scenario is also likely to include supply chain disruptions due to fuel and oil-based product shortages,” the company said.
On the Asia-Pacific growth outlook, the agency revised its core 2026 GDP growth forecasts for Asia-Pacific excluding China to 4.5 percent from 4.2 percent previously, driven by significant upward revisions for Hong Kong, India, Malaysia, Singapore and Taiwan. “We see growth of 4.4 percent in 2027,” he said.
