- ADB lifted India’s growth outlook to 7.0% for FY27.
- S&P Global also revised India’s FY27 forecast to 7.0%.
- Upgrades reflect strong investment, exports, and robust consumption.
India’s economy is outperforming expectations by enough that two major international agencies have independently raised their growth forecasts for the country within the same week, both now pencilling in 7% expansion for the current financial year.
ADB lifts India and South Asia outlook
The Asian Development Bank (ADB) on Wednesday revised its GDP growth forecast for India in 2026 (FY27) to 7.0%, up 40 basis points from the 6.6% it had projected earlier, according to the bank’s latest statement, reported IANS.
The upgrade also lifted the outlook for South Asia as a region, which ADB now expects to grow 6.4% this year, up from the 6 per cent forecast in July. The bank attributed this to strong public investment and firm export growth in India specifically.
The picture across the wider Asia-Pacific region was more subdued, however. ADB expects growth in developing Asia and the Pacific to slow from 5.5% in 2025 to 5% this year, before recovering slightly to 5.1% in 2027 (FY28). Even so, the 2026 regional forecast came in 0.1 percentage points above the bank’s previous outlook.
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“The region has remained resilient, but the risks are growing,” ADB President Masato Kanda said, pointing to a strengthening El Nino that is bringing drier conditions, smaller harvests and reduced hydropower output, a combination he warned would push up food and energy prices and hit the most vulnerable hardest.
“The prolonged energy crisis and renewed risks in financial markets make it even more important for governments to prepare and protect the people most exposed. ADB is strongly supporting such efforts,” Kanda added.
According to the bank, growth is currently being underpinned by strong investment, government stimulus and robust technology exports linked to the global artificial intelligence boom, even as geopolitical tensions and El Nino-driven price pressures work in the opposite direction.
In its Asian Development Outlook for September 2026, ADB also trimmed its regional inflation forecast for the year slightly, to 4.2% from 4.3% in July, noting that price stabilisation measures had partly cushioned the impact of persistently high energy costs.
The bank flagged two principal risks to its outlook: an escalation of conflict, particularly a broadening of tensions in the Middle East or an intensification of the war in Ukraine, which could keep global energy prices elevated and unpredictable and spill over into other commodities; and a very strong El Nino, expected to persist through the first quarter of 2027, which could push up both energy demand and food prices by hitting agricultural output. A sharp correction in AI-linked equity valuations, tighter financial conditions and renewed trade policy uncertainty were named as additional downside risks.
S&P Global Ratings arrives at a similar number
Separately, S&P Global Ratings also raised its India GDP growth forecast to 7% for FY27 on Wednesday, up from its earlier estimate of 6.6%, citing robust industrial activity, healthy consumption, strong goods exports and accelerating government investment.
“Several factors drove growth to higher levels than we expected in the June quarter. We have consequently upgraded our GDP growth forecast for the current fiscal year, ending March 31, 2027, to 7.0%, from 6.6% previously,” the ratings agency said in its note.
S&P was more cautious about the months ahead, however, projecting that growth would ease in the second half of the fiscal year as the boost from Goods and Services Tax rationalisation and income tax cuts fades.
The agency also flagged weather as a risk worth watching closely: cumulative monsoon rainfall was running 15% below normal as of 9 September 2026, making agricultural output and food inflation key variables in the months ahead.
The upgrades follow the government’s own GDP data, which pegged first-quarter FY27 growth at 7.8%, a figure strong enough, S&P noted, to trigger a wave of upward revisions from forecasters more broadly.
The regional backdrop
S&P’s note placed India’s performance against a broader emerging-market backdrop, where GDP growth averaged 5.2% year-on-year in the second quarter. China’s outlook, by contrast, remains subdued: the agency forecasts real GDP growth of 4.3% for both 2026 and 2027, with consumption and investment there staying weak through August amid a prolonged housing market slide, soft confidence and fiscal contraction over the first seven months of the year.
“The primary risk is that external or policy shocks could trigger a sharp slowdown, which would then be worsened by a fall in confidence,” S&P said of China’s trajectory.
For the Asia-Pacific region as a whole, S&P struck a more upbeat note. “Across Asia-Pacific we expect growth to hold up amid a boom in tech exports and macroeconomic policy that is supporting domestic demand. Our baseline 2026 GDP growth forecast for Asia-Pacific is 4.6%, 0.2 percentage points higher than a quarter ago. We see 2027 growth at 4.4%,” the agency said.
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