ADB Raises India FY27 Growth Forecast to 6.9%, Flags Strong Domestic Demand

Asian Development Bank (ADB) has raised India's GDP growth forecast for FY27 to 6.9%, citing strong domestic demand and the impact of lower US tariffs, signalling continued resilience in the country’s economic outlook.

The projection comes close on the heels of the Reserve Bank of India, which also pegged India’s growth at 6.9% in its April monetary policy review, although it flagged some moderation in the first half of the fiscal year.

The ADB noted that growth across developing Southeast Asia is expected to remain broadly stable, even as some economies transition into advanced status. However, growth in advanced economies across Asia and the Pacific is projected to slow to 2.2% in 2026 from 2.5% last year, with moderation expected in key markets such as Hong Kong, Japan, Singapore and Taiwan.

Inflation in developing Asia is expected to rise to 3.6% this year from 3% in 2025, driven primarily by higher energy prices. The bank highlighted that rising fertiliser and input costs, particularly due to dependence on the Middle East for supplies like urea and ammonia, could push food prices higher across the region.

Global Risks, World Bank Cuts Outlook

The report also flagged risks from the ongoing Iran conflict, which could disrupt supply chains for key industrial inputs such as helium, sulphur and petrochemicals, potentially impacting semiconductor production. Tourism-dependent economies in the region may also face pressure due to disruptions in global travel.

Oil prices are expected to remain elevated in the near term, although they could stabilise if geopolitical tensions ease. However, sustained high energy costs and disruptions in fertiliser supply chains may add to global inflationary pressures, particularly in food.

In contrast to ADB’s relatively optimistic stance, the World Bank has lowered India’s growth forecast for FY27 to 6.6% from 7.2%, citing the impact of the West Asia conflict on consumption, industrial activity and global energy markets.

According to its India Development Update report, growth would have been higher at 7.2% in the absence of the conflict, supported by strong momentum in FY26 and ongoing economic reforms. However, prolonged disruptions in oil and gas supply are expected to weigh on economic activity.

The World Bank also projected South Asia's growth to slow to 6.3% in 2026 from 7% in 2025, reflecting broader regional pressures from global energy market disruptions.

Despite the near-term risks, the World Bank emphasised that boosting private sector-led growth will be critical to enhancing economic resilience and supporting job creation, particularly for the country’s growing workforce.