S&P Global Raises India FY27 GDP Forecast To 7.1%, Flags Inflation Risks

S&P Global has raised its forecast for India's GDP growth for FY27 by 40 basis points to 7.1%. This is the most recent forecast. This shows that expectations for economic growth have improved, even though there are still uncertainties around the world.

Invest in Indian Markets and Unlock Future Potential With 5paisa!

Open Account Now

Upward Revision In Growth Projections

The ratings agency also revised its medium-term forecasts upward, raising FY28 growth estimates by 20 basis points to 7.2% and FY29 projections by 20 basis points to 7.0%. The revisions indicate continued expansion in Asia’s third-largest economy over the next three financial years.

S&P Global stated that the Reserve Bank of India is expected to maintain a neutral policy stance, with interest rates likely to remain unchanged in the base case as it balances growth and inflation dynamics.

Inflation Outlook Adjusted Higher

In addition, growth revisions, S&P Global also increased their inflation forecast. The forecast for consumer price inflation is at 4.3% in FY27, compared to 2.5% in FY26. This is because of the influence of high global energy prices. 

The agency also noted that increasing crude oil prices are a major factor affecting inflation, especially because India is a net importer of oil.

External Risks Highlighted By Moody’s Analytics

Separately, Moody’s Analytics has cautioned that prolonged geopolitical tensions in West Asia could significantly impact regional growth. In its latest Asia-Pacific outlook, the agency stated that India’s output could fall by nearly 4% from its baseline trajectory if the conflict persists.

The report identified India among the most exposed major economies in the region, along with South Korea and China, due to reliance on oil and gas imports from Gulf economies affected by the conflict.

Energy Dependence And Economic Impact

As per Moody’s Analytics, sustained increases in energy prices could result in higher inflation, a widening trade deficit, and pressure on consumption. The report also noted that disruptions in the supply chain of energy and sustained commodity prices are major risks for economic stability. 

The latest revisions from S&P Global and the caution highlighted in the Moody’s Analytics report reflect the relationship between domestic growth momentum and external risks, with energy prices again at the center of India’s economic prognosis in the coming years.