OECD raises raises India's FY27 GDP growth forecast by 80 bps to 7.1%

On Wednesday, the OECD increased its forecast for India's GDP growth in the fiscal year 2027 by 80 basis points, bringing the projected growth rate to 7.1% from 6.3% previously estimated in June. According to the OECD's September Interim Economic Outlook, India's growth is anticipated to decelerate from 7.8% in FY26 to 7.1% in FY27, and then to 6.5% in FY28.

The Paris-based organization cautioned that despite recent robust growth, reduced consumer purchasing power is expected to temper India's economic expansion in the second half of the year, followed by a gradual recovery in 2027.

This development follows the recent upgrades of India's growth outlook by Fitch Ratings, which raised the FY27 growth forecast to 6.9% from 6.4%, and S&P Global Ratings, which projected 7% growth, up from its earlier estimate of 6.6%. Moody's had already revised its forecast upward, from 6% to 7% in the previous week. All the upgrades followed India's announcement of a remarkable 7.8% GDP growth in the April-June quarter.

The world is becoming increasingly optimistic about India's economic prospects, with Fitch's latest upgrade raising the FY27 growth forecast by a substantial 50 basis points. Fitch attributed India's strong performance in the June quarter to the economy's resilience in the face of the shock from the US-Iran war, even as global crude oil prices remained above $100 per barrel.

Private consumption grew by 7.1%, while manufacturing expanded by 9.2% and financial, real estate, and professional services grew by around 12.1%. Gross fixed capital formation, an indicator of investment in infrastructure and machinery, grew by 11.9% in the June quarter.