India: Growth and inflation forecasts revised higher – UOB
UOB's Jester Koh note they raise their FY27 Gross Domestic Product (GDP) forecast for India to 7.2% from 6.8% after a stronger-than-expected 1QFY27 expansion of 7.8% year-on-year.
UOB’s Jester Koh has revised upward their growth and inflation forecasts for India. They now expect India’s GDP to grow by 7.2% in FY27, up from the previous 6.8% forecast. This increase is due to a stronger-than-expected 7.8% year-on-year expansion in the first quarter of FY27. Inflation forecasts have also been raised, with the headline inflation expected to reach 5.2% in FY27, from the prior 5.0%.
The rise in inflation is attributed to robust food price momentum, higher costs in services and energy, and partly offset by subsidies and ample public foodgrain stocks. UOB projects several months of stronger month-over-month increases in inflation, mainly due to adverse weather-related events affecting food supply, although this would be somewhat mitigated by sufficient public foodgrain stocks.
India’s real interest rate is expected to turn negative without additional rate hikes, with inflation projected to exceed 6% year-on-year as early as November 2026.
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