World Bank raises India FY27 growth forecast to 6.6% despite West Asia war-led global slowdown

The World Bank has marginally raised India’s growth forecast for 2026-27 to 6.6% from the 6.5% projected in January, making it one of the few major economies to see an improved outlook even as the financial institution downgraded its global growth outlook due to the West Asia war.

In its June 2026 Global Economic Prospects report released on Thursday, the World Bank said India’s economy is expected to expand 6.6% in FY27, down from an estimated 7.7% in FY26, before accelerating to 7.2% in FY28.

Despite the slowdown, India is expected to remain among the fastest-growing major economies globally and to continue anchoring growth in South Asia, which is forecast to expand by 6.3% in 2026, according to the report.

The World Bank’s forecast comes against the backdrop of a resilient Indian economy, which expanded 7.8% in the March quarter of FY26 despite disruptions from the West Asia war. The growth rate moderated from an upwardly revised 8% in the preceding quarter, lifting full-year FY26 growth to 7.7%, according to provisional government data released on 5 June.

Despite the quarterly moderation, the annual figure was slightly above market expectations for a 7.6% expansion. The economy grew 7.1% in FY25.

The lender attributed the weaker global outlook to the West Asia war, which has disrupted energy supplies, pushed up commodity prices and reignited inflationary pressures across economies.

According to the report, overall commodity prices are expected to rise 22% in 2026, compared with a decline anticipated earlier in the year. Brent crude oil prices are projected to average $94 per barrel this year, up 36% from 2025 levels and more than 50% above the World Bank’s January forecast.

Given that India is one of the world’s largest crude oil importers, the World Bank’s warning assumes a greater significance as higher energy prices can increase import costs, stoke inflationary pressures and raise the burden on public finances through fuel and fertilizer support measures.

The report noted that economies dependent on energy imports are among those facing weaker prospects due to the latest shock.

At the same time, India’s forecast upgrade suggests that domestic demand and economic activity remain relatively resilient despite global headwinds. The World Bank’s projections show India growing significantly faster than China, whose economy is expected to expand 4.2% in 2026, and well above the global average.

The report warned that the outlook remains uncertain. Any further escalation of the West Asia war or continued disruption to commodity supplies could push up oil and food prices, fuel inflation and slow economic growth. In a worst-case scenario, global growth could fall to 1.3% in 2026.

It also cautioned that higher government debt levels across emerging economies could push up borrowing costs and constrain investment, while calling for greater efforts to strengthen fiscal sustainability, maintain financial stability and mobilize private investment. It said policymakers would need to balance inflation control with support for growth as economies navigate heightened geopolitical uncertainty.

“The World Bank forecast looks to be in line with current street estimates and that of the Reserve Bank of India, despite assuming a fairly high average Brent crude price of $94 per barrel. This reflects a substantial slowdown from FY26, but is still a resilient estimate given the global noise,” said Madhavi Arora, chief economist at Emkay Global Financial Services Ltd.