The Reserve Bank of India (RBI) has projected a lower real GDP growth of 6.9% for 2026-27, compared with 7.6% estimated for the previous financial year, citing the prolonged West Asia conflict as a key downside risk to India's economic outlook. According to the RBI's annual report, the central bank warned that while the impact of the conflict is likely to remain contained in the near term, an escalation could derail India's otherwise positive growth trajectory. The RBI noted that geopolitical risk has re-emerged as the dominant drag on global growth in 2026, with the global economy projected to grow by 3.1% in 2026 (as against the earlier projection of 3.3% in January).
India has emerged as the standout performer in global growth expectations, according to the latest World Economic Forum survey. 52% of chief economists surveyed expect strong or very strong growth in the year ahead, making India the geography with the strongest growth expectations in the survey. As per the WEF report, "India stands out as the most upbeat growth story in the survey," with slightly more than half of the chief economists expecting strong or very strong growth over the next 12 months. This positioning highlights India's continued economic resilience and potential as a key growth driver in the global economy, even as global growth prospects face significant challenges from the West Asia conflict. The report noted that India, along with the United States, is expected to remain relatively resilient despite global uncertainty, supported by robust domestic demand, infrastructure spending, investment momentum, trade agreements and policy support measures.
The survey results reflect a positive outlook for India's economic trajectory, with economists identifying the country as a key growth engine. The strong growth expectations from the WEF survey indicate that India's economic fundamentals continue to attract international attention and confidence from global financial experts. According to the report, India is projected to grow 6.5% in FY27, with the country ranked second after the US among the most attractive business destinations for multinational firms over the next year. This positioning suggests that India's economic policies and reforms are being well-received by the international business community, even as global growth faces significant headwinds from the West Asia conflict. The WEF noted that "India offers the clearest blend of scale, growth and potential among large emerging markets," with the country maintaining active economic policy stance and expanding market access through new trade agreements, including with the EU.
Despite India's strong growth outlook, the survey reveals inflationary pressures for India, with 61% of respondents projecting high or very high inflation in the country over the coming year as rising energy costs weigh on the economy. Around 41% of respondents anticipate a significant increase in energy prices in India over the next 12 months, while 33% foresee a sharp rise in food prices. The RBI has projected consumer price inflation for 2026-27 at 4.6%, with risks tilted to the upside, significantly higher than its revised estimate of 3.7% for the previous fiscal. The central bank noted that upside risks may emanate from a surge in global fuel and commodity prices amid geopolitical tensions, potential spillovers to input and wage costs and volatility in exchange rates. Retail inflation in the country edged up to 3.5% year-on-year in April, compared to 3.4% in March.
The WEF survey highlights a widening regional divergence in growth prospects across different global regions amid the West Asia conflict. While Europe faces mounting stagflation risks and the Middle East and North Africa region is expected to witness the sharpest deterioration in growth, India and parts of South-East Asia are seen as comparatively resilient. However, the survey also flags significant global challenges, with 89% of surveyed chief economists expecting global growth to weaken over the next 12 months due to the conflict in the Middle East and the closure of the Strait of Hormuz. The closure of the Strait of Hormuz has disrupted vital energy, food and fertilizer flows, threatening access and growth, while 94% of respondents expect global inflation to rise due to higher energy and food prices caused by the disruption. Despite the worsening outlook, only 13% of respondents believe a global recession is likely within the next year, according to the WEF report.
