S&P Global Revises India’s GDP Growth Forecast to 7.1% for FY27, Flags Inflation Risks

S&P Global has raised India’s GDP growth forecast for FY27 by 40 basis points to 7.1%, reflecting steady economic performance despite global uncertainties.

The ratings agency also upgraded its medium-term projections, increasing FY28 growth to 7.2% and FY29 to 7.0%, both by 20 basic points.

Growth Outlook Strengthens Across Forecast Horizon

The upward revision reflects continued resilience in the Indian economy, supported by domestic demand and ongoing investment activity.

The revised projections suggest that India’s growth trajectory remains stable even as global conditions remain uncertain.

RBI Likely to Maintain Neutral Policy Stance

On the monetary policy front, S&P Global expects the Reserve Bank of India (RBI) to keep interest rates unchanged in the near term.

The central bank is likely to maintain a neutral stance, balancing growth with inflation control as economic conditions evolve.

Rising Crude Oil Prices Pose Inflation Risks

Despite the improved growth outlook, S&P highlighted risks from rising fuel prices. Elevated crude oil levels could push inflation higher, with consumer price inflation projected to rise to 4.3% in FY27, up from 2.5% in FY26.

Moody’s Flags Downside Risks from Global Tensions

Separately, Moody’s Analytics warned that India could face a sharper economic impact if geopolitical tensions in the Middle East persist.

The report noted that India is among the more vulnerable economies in the Asia-Pacific region due to its reliance on oil and gas imports.

A prolonged rise in energy prices could affect multiple areas, including inflation, trade balances and domestic demand.

India’s dependence on energy imports, particularly from Gulf nations, increases its exposure to global supply disruptions. Any sustained increase in fuel costs could widen the trade deficit and put pressure on consumption and economic activity.

Conclusion

S&P Global’s upward revision underscores confidence in India’s growth outlook, with projections indicating steady expansion over the medium term.

However, rising crude oil prices and global uncertainties remain key factors that could influence inflation and overall economic stability in the coming years.

Source: https://www.moneycontrol.com/

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