HOME > MARKETS > ECONOMY NEWS
  ECONOMY NEWS
ECONOMY
Moody’s raises India’s GDP growth forecast to 7% for FY27
Sep-18-2026

Moody’s Ratings has sharply raised India’s Gross Domestic Product (GDP) growth forecast for the current fiscal (FY27) to 7 per cent from its earlier estimate of 6 per cent, citing the country's resilience to global shocks arising from the conflict in the Middle East. However, it warned that high energy prices and El Nino-related food price pressures pose risks ‌to inflation, consumption and growth. In its periodic review of India’s ‘Baa3’ sovereign rating, Moody’s expects debt reduction to remain gradual and debt affordability to stay weaker, reflecting India’s high debt burden and elevated interest cost structure.  

Moody’s said India’s economy expanded to 8.2 per cent year on year in the first six months of calendar year (CY) 2026, up from 7.3 per cent for the full year in CY 2025, supported by stronger private consumption, robust gross fixed capital formation that reflects continued public infrastructure spending and a likely revival of private sector investment, and sustained strength in the services sector. It expects India to continue growing faster than other G20 economies and similarly rated emerging-market sovereigns, although it flagged several risks to the outlook.

It said ‘looking ahead, in the absence of an enduring resolution to the conflict in the Middle East, elevated energy prices could push annual average inflation beyond our projection of 4.8 per cent for fiscal 2026-27, which is already significantly higher than the 2.4 per cent outturn in fiscal 2025-26, while El Nino-related disruptions could increase food price pressures, weighing on private consumption and economic activity.’ It noted that while the increased diversification of India’s crude import sources, sizeable foreign exchange reserves and strong domestic demand provide important buffers, higher energy and fertilizer import costs, softer external demand and weaker remittance inflows from the Middle East could widen the current account deficit and weigh on growth momentum more broadly.


  RELATED NEWS >>