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Informist, Tuesday, Oct. 6, 2026

 

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--World Bank: S Asia econ maintaining strong momentum driven by local demand
--World Bank: South Asia suffering from high energy prices
--CONTEXT: World Bank launches India's economic update
--World Bank sees India econ growing 7.1% in FY27 from 6.6?rlier
--World Bk: High energy prices, El Nino pose risk to FY27 growth projection
--World Bank: AI may become new driver of growth
--World Bank: Strong macroecon mgmt helped India support growth
--World Bank: India remains fastest growing economy globally
--World Bank: India should focus on strengthening structural resilience
--World Bank: High uncertainties remain risk to India growth 
--World Bank: Private consumption remains main driver of India's growth
--World Bank: Exports to mainly support India FY27 growth outlook
--World Bank: Weak monsoon rains weakened agri prospects
--World Bank: Inflationary pressures, fincl condition relatively stable
--World Bk: Youth unemployment rose in India, mainly among rural young women
--World Bank: See India GDP growing 7.2% in FY28, 7.0% in FY29
--World Bank: See oil prices going back to $80-$85/bbl in medium term

 

 

 

NEW DELHI – World Bank Tuesday raised its projection for India's GDP growth for the financial year 2026-27 (Apr-Mar) by 50 basis points to 7.1% on the back of strong domestic demand, macroeconomic management, and government spending. The faster-than-anticipated growth reported for the June quarter despite the war in West Asia will also support India's economic growth in the current financial year.

 

India remains the fastest-growing economy in the world, Ran Li, senior economist (India) at the World Bank, said. However, high uncertainties pose a risk to India's growth outlook, she said. There are risks to the outlook mainly arising from higher energy and commodity prices as well as severe El Nino weather conditions, the World Bank said.

 

Overall rainfall shortage during the south-west monsoon has weakened agricultural prospects. "The monsoon deficit appears to be larger than originally expected, with much of the country receiving less rain than usual. This is expected to reduce agricultural output and rural demand while increasing food inflation, adding to existing pressure from higher energy prices," economists at the World Bank said.

 

The latest projections are based on Brent crude oil prices averaging $90-$100 per barrel. However, the agency sees oil prices coming down to $80-$85 per barrel over the medium term, Aurelien Kruse, lead economist for the World Bank's economic policy team in India, said in a media briefing on the India development update report. Currently, crude oil is trading at $99.07 per barrel. 

 

Further, the World Bank has projected India's GDP growth to improve to 7.2% in FY28 before easing to 7.0% in FY29. Indian economy expanded by 7.8% in FY26 and in the June quarter. "Strong macroeconomic management helped India support its growth," the agency said.

 

The global agency has revised its India FY27 growth forecast of 6.6%, estimated in April. The World Bank has upgraded its outlook as growth has held up better than expected despite trade and geopolitical uncertainties.

 

Going forward, the multilateral agency sees India's economic growth moderating in the subsequent quarters of the current financial year. "Private consumption is expected to remain the main driver of growth, although a rainfall deficit through August is likely to weigh modestly on rural demand, while subdued government consumption will stay muted," the World Bank said.

 

 

Growth will be supported by continued strong momentum in the industrial and services sectors, the agency said. India's growth potential remains strong, supported by a series of major reforms, such as labour code consolidation, goods and services tax reforms, tariff rationalisation, the Insolvency Act, and infrastructure investments for both the real and digital economy, according to economists at the World Bank.

 

Private consumption, exports, and artificial intelligence are likely to be the main growth drivers of the Indian economy, said Sebastian Eckardt, lead economist at the World Bank Group. "Exports have performed better than expected to provide the main upside to the FY27 growth outlook, relative to the April forecast," Li said. 

 

The economists see risks to be more balanced than before, but they remain higher on the downside. "A prolonged or intensifying Middle East conflict could keep oil prices elevated for longer, increasing pressures on domestic inflation in India, the current account, and public finances, while disrupting goods trade," the report said.

 

"India should focus on strengthening structural resilience and leverage on new opportunities such as artificial intelligence," Li said.

 

On the employment side, India's labour market remained broadly stable in FY26 and early FY27, supported by continued gains in female labour force participation and gradual shift toward paid employment. "Youth employment increased particularly among rural young women, partly reflecting weaker agricultural activity associated with the delayed monsoon and the transition between rural employment programmes," the World Bank said. This also shows a shift in labour market behaviour, and pointed to a stronger and more sustained labour market attachment among young rural women amid changing labour market conditions.

 

The global economy has weathered the war better than feared, but the impacts remain significant and uneven across regions and sectors. As a result, the South Asia region is suffering from high energy prices. That said, the South Asian economy maintained strong growth momentum driven by domestic demand. "...inflationary pressures and financial conditions have remained relatively stable, and trade has been robust," the agency said.  End

 

US$1 = INR 96.38

 

Reported by Shweta and Sagar Sen

Edited by Himanshi Gupta

 

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