Blitz Bureau
NEW DELHI: Morgan Stanley on May 13 they forecast India’s real GDP growth at 6.7 per cent in FY27 and 7 per cent for FY28 amid geo-political tensions, adding that the RBI policy measures would likely remain supportive to minimise damage to growth. The West Asia energy shock is most pronounced in quarter ending June 2026, when growth troughs at 6.5 per cent YoY amid elevated commodity prices and lingering supply chain frictions.
“Thereafter, as supply-side constraints ease and commodity prices moderate, we expect a gradual normalisation in activity, with growth converging to trend by March 2027,” said Upasana Chachra, Chief India Economist at Morgan Stanley.
“That said, global conditions remain fluid, with elevated uncertainty. Sustained high oil prices could trigger non-linear and progressively larger impacts on growth, as the burden on households and firms intensifies over time, leading to cutbacks in consumption and investment,” Chachra added. The report expects growth to hinge on domestic demand amid external uncertainty.
“While the starting point of macro stability is favourable, prolonged supply disruptions and elevated commodity prices are likely to erode stability. Policy will likely remain supportive to minimise damage to growth,” it noted.
Despite a weaker external backdrop, April activity indicators show resilience, supported by strong domestic demand. While the ongoing conflict and higher oil prices will likely weigh on growth, “we expect outcomes to exceed earlier expectations,” said report.
