ADB Cuts India FY27 Growth Forecast To 6.6% Amid Higher Oil Costs
· Free Press Journal
India’s economic growth is expected to moderate to 6.6% in the financial year 2026-27, according to the Asian Development Bank (ADB), which revised down its earlier projection of 6.9%.
The downgrade comes amid concerns over higher oil prices, increased transportation costs and their impact on consumer sentiment and private sector demand.
Visit mwafrika.life for more information.
In its latest Asian Development Outlook report, the Manila-based multilateral lender said India’s growth outlook would continue to be supported by several policy measures.
These include efforts to attract foreign capital, fuel tax reductions, targeted credit support, strong services exports and increased public capital expenditure.
Despite the downward revision, ADB’s forecast remains more optimistic than the International Monetary Fund’s (IMF) projection of 6.4% growth for FY27.
IMF Appoints Silvana Tenreyro As Chief Economist, Former Bank Of England Policymaker To Take Charge From August 10The ADB expects India’s growth momentum to strengthen again in FY28, with GDP expansion projected at 7.3%, unchanged from its previous estimate and above the IMF’s forecast of 6.7%.
The report also reduced its growth outlook for the broader South Asian region, lowering the 2026 forecast to 6% from 6.3% earlier. ADB attributed the revision to rising crude oil prices, higher freight costs and uncertainty surrounding remittance flows.
The bank said India is likely to remain one of the fastest-growing major economies despite near-term challenges.
However, it raised its inflation forecast for India in FY27 to 5.2% from the earlier estimate of 4.5%, citing the impact of higher energy and food prices. The inflation forecast for FY28 was maintained at 4%.
ADB noted that the ongoing conflict in the Middle East has affected energy markets and global supply chains, increasing production costs and creating uncertainty for economies across developing Asia and the Pacific.
For developing Asia and the Pacific as a whole, ADB lowered its 2026 growth forecast to 4.9% from 5.1%.
The downgrade reflects disruptions in energy supplies, elevated logistics costs and slower economic activity caused by prolonged geopolitical tensions.
The report highlighted that while external pressures remain a challenge, India’s domestic growth drivers, including infrastructure spending, services exports and policy support, are expected to help sustain economic expansion over the medium term.