OECD raises FY27 economic growth forecast for India by 80 bps to 7.1 pc

New Delhi: The Organisation for Economic Cooperation and Development (OECD) on Wednesday raised its 2026 (FY27) economic growth forecast for India to 7.1 per cent, an 80 basis points (bps) increase from its June projection of 6.3 per cent growth for the country, amid resilient domestic demand and government policies that cushioned households and firms from the impact of higher energy prices.

The OECD outlook also raised India’s 2027 (FY28) GDP growth projection to 6.5 per cent, from the earlier 6.4 per cent.

Despite recent strong momentum, "reduced purchasing power is also expected to weaken growth in India through the second half of this year, before a gradual recovery takes place in 2027", said the report.

In India, headline inflation is projected to fall from 4.7 per cent in 2026 to 4.2 per cent in 2027, it added.

Amongst the emerging-market economies, "India is projected to raise policy rates temporarily to help offset stronger inflationary pressures", the OECD report added.

In some emerging market economies, such as India, government price support measures are mitigating energy price pressures and will continue to do so in the near-term.

"Global growth has held up better than expected, but the buffers that absorbed the energy shock are being depleted. Growth is weaker than last year, and inflation is rising again," OECD Secretary-General Mathias Cormann said.

“Governments need to target support where it is most needed and get public spending on a sustainable track. They also need to build long-term growth foundations, with stronger skills, more diversified energy supplies and faster AI adoption,” Cormann added.

The Outlook projects global growth of 2.9 per cent in 2026 and 3.0 per cent in 2027.

The evolution of the conflict in the Middle East remains highly uncertain and will continue to pose considerable risks to the baseline projections.

GDP growth in the United States is projected at 2.2 per cent in 2026 before moderating to 2.1 per cent in 2027.

In the euro area, growth is projected to be 1 per cent in both 2026 and 2027. China’s growth is projected to be 4.5 per cent in 2026 and 4.2 per cent in 2027.

ABOUT THE AUTHOR

IANS

[email protected]