New Delhi — India’s real gross domestic product is projected to grow 6.6 percent in fiscal 2027 amid higher energy costs, a weaker monsoon outlook and slowing global growth, according to a report released Wednesday.
S&P Global Ratings said consumer inflation in India is expected to rise to 5.1 percent during the fiscal year as manufacturers pass higher energy costs on to consumers. Recent increases in administered prices for gasoline, diesel and cooking gas are also expected to add to inflationary pressures.
The ratings firm forecast a policy interest rate increase during the second half of the year.
“With the current account deficit on the rise and the rupee weakening, the authorities took measures to encourage foreign capital inflows,” the report said.
Those measures have helped strengthen the rupee against the U.S. dollar to some extent, it added.
S&P said the Asia-Pacific economic outlook is being shaped by resilient global activity, stress in energy markets and an artificial intelligence-driven boom in technology exports.
“The global economy seems to have persevered in the face of the Middle East conflict and resulting energy stress. The resilience has been supported by strong AI-related investment, especially in the US, and accommodative financial conditions,” the report said.
The effects of higher energy costs are becoming visible through rising input expenses and longer supplier delivery times, according to the report.
“Higher fertilizer prices weigh on food production and raise food prices. Rising inflation is eroding purchasing power, thus depressing growth. Sharply higher fertilizer prices may weigh on food production and fuel food prices,” it added.
S&P’s baseline forecast assumes disruptions in the Strait of Hormuz will gradually ease during the second half of the year. Global oil prices are expected to remain elevated in the coming months before declining gradually and returning to pre-crisis levels in early 2028.
Although governments continue to limit the effect of higher crude oil prices on domestic fuel costs, rising prices for other goods and services could increase consumer inflation by 0.5 to 0.6 percentage points during the third quarter in China, India and Japan.
The firm projected that average inflation in those countries could be 0.3 to 0.4 percentage points higher in 2026. (Source: IANS)
