World Bank raises India’s FY27 growth forecast to 6.6% despite global slowdown caused by war in West Asia | Today’s news
The World Bank marginally raised India’s growth forecast for 2026-27 to 6.6% from 6.5% forecast in January, making it one of the few major economies to see an improved outlook, even as the financial institution cut its global growth outlook due to the war in West Asia.
In its June 2026 Global Economic Prospects report released on Thursday, the World Bank said India’s economy is expected to grow by 6.6% in FY27, down from an estimated 7.7% in FY26, before accelerating to 7.2% in FY28.
Despite the slowdown, India is expected to remain among the fastest-growing major economies globally and continue to anchor growth in South Asia, which is forecast to grow by 6.3% in 2026.
The World Bank forecast comes against the backdrop of a resilient Indian economy, which grew 7.8% in the March quarter of FY26 despite the disruption of the war in West Asia. According to preliminary government data released on June 5, the pace of growth eased from a revised 8% in the previous quarter, lifting full-year FY26 growth to 7.7%.
Despite the quarterly moderation, the annual figure was slightly above market expectations for a 7.6% expansion. The economy grew by 7.1% in FY25.
Gobal Growth Forecast
Meanwhile, the World Bank cut its forecast for global growth in 2026 to 2.5% from 2.9% in 2025, which it described as the weakest pace since the covid-19 pandemic. Growth in emerging markets and developing economies is expected to slow to 3.6%, while advanced economies are expected to grow by just 1.5%.
The lender attributed the weaker global outlook to the war in West Asia, which has disrupted energy supplies, pushed up commodity prices and reignited inflationary pressures across economies.
According to the report, overall commodity prices are expected to rise by 22% in 2026, compared to a decline expected at the start of the year. Brent crude prices are expected to average $94 a barrel this year, up 36% from 2025 and more than 50% above the World Bank’s January forecast.
As India is one of the world’s largest oil importers, the World Bank’s warning takes on greater significance as higher energy prices could raise import costs, fuel inflationary pressures and increase the burden on public finances through fuel and fertilizer subsidies.
The report noted that economies dependent on energy imports are among those facing a weaker outlook due to the latest shock.
At the same time, India’s forecast update suggests that domestic demand and economic activity remain relatively resilient despite global headwinds. World Bank projections show India growing significantly faster than China, whose economy is expected to expand by 4.2% in 2026, well above the global average.
The report warned that the outlook remains uncertain. Any further escalation of the war in West Asia or continued disruptions in commodity supplies could raise oil and food prices, fuel inflation and slow economic growth. In the worst case scenario, global growth could fall to 1.3% in 2026.
It also warned that higher levels of government debt in emerging economies could raise borrowing costs and constrain investment, while calling for greater efforts to strengthen fiscal sustainability, maintain financial stability and mobilize private investment. She said policymakers will need to balance controlling inflation with supporting growth as economies navigate heightened geopolitical uncertainty.
“The World Bank’s forecast appears to be in line with current street estimates and Reserve Bank of India estimates, although it assumes a fairly high average Brent price of $94 per barrel. This reflects a substantial slowdown from FY26, but is still a resilient estimate given the global noise,” said Madhavi Arora, chief economist at Emkay Global Financial Services Ltd.
