OECD Lowers India's FY27 Growth Forecast to 6.1% Amid Global Economic Uncertainties

OECD Trims India's Economic Growth Forecast to 6.1 Percent

The Organisation for Economic Co-operation and Development (OECD) has revised its forecast for India's economic growth in FY27 to 6.1 percent, down from 6.2 percent earlier. This moderation reflects a marginal slowdown amid global uncertainties, with external headwinds and softer domestic momentum weighing on activity.

Global Conditions Remain Fragile

The OECD highlighted that global conditions remain fragile, with geopolitical tensions, tighter financial conditions, and trade disruptions posing risks to emerging markets. While the decline in tariffs is expected to support growth in India, gas rationing will disrupt some production activities, and fiscal support is expected to fade.

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Inflation Outlook Turns Less Benign

The OECD has turned more cautious on inflation, projecting price pressures to rise above 5 percent in FY27, about 1.7 percentage points higher than its earlier estimate. Inflation is expected to increase from 2.0 percent in FY26 to 5.1 percent in FY27, before moderating to 4.1 percent in FY28.

Government Retains Inflation Target

The government has retained the 4 percent inflation target for the Monetary Policy Committee until 2031, signaling continued focus on price stability. Inflation is expected to return closer to the Reserve Bank of India's target over the medium term.

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Global Growth Remains Steady

Globally, growth is expected to remain steady at 2.9 percent, though regional trends are diverging. The OECD expects growth in the Euro Area to weaken by 0.4 percentage points, while the United Kingdom could see a sharper slowdown of about 0.5 percentage points. In contrast, the United States is projected to perform better than earlier estimates, with growth revised up to 2 percent from 1.7 percent.

Domestic Demand Remains Supportive

The outlook points to a moderation rather than a sharp slowdown for India, with domestic demand expected to remain supportive even as global risks persist.