World Bank raises India's growth forecast to 7.2% for FY2026, sees limited impact from US tariffs
The upgraded outlook is also driven by robust domestic consumption, recent tax cuts, and higher real rural incomes.
The World Bank has revised India's FY2026 growth forecast to 7.2 percent, citing resilient domestic demand despite higher US tariffs. This marks a significant increase from the 6.3 percent estimate made in June 2025.
However, according to the World Bank's latest Global Economic Prospects report, assuming the 50 percent tariffs imposed by the Trump administration remain in place throughout the forecast period, growth is expected to moderate to 6.5 percent in FY27.
The agency said that stronger-than-expected domestic demand and improved consumption patterns would mitigate the impact of higher US tariffs on India. The upgraded outlook is also driven by robust domestic consumption, recent tax cuts, and higher real rural incomes.
The World Bank report stated: "In SAR, the projected slowdown in 2026 primarily reflects the impact of increased US tariffs on India’s goods exports. Growth in the South Asia region (SAR) is poised to rebound in 2027, as exports recover and domestic demand firms, supported by strong services activity as the effects of political uncertainty in several economies dissipate."
However, it cautioned that despite the strong performance of services exports, the US tariffs could dampen India's goods exports and impact overall growth. Expressing concerns over large fiscal deficits and spending pressures, the World Bank said it expects India's fiscal deficit to gradually decline through consolidation measures.
The agency added that the continued rapid growth, led by India, is expected to support further economic convergence along with a significant reduction in poverty rates. In 2026, growth in South Asia is projected to slow to 6.2 percent, primarily due to the impact of increased US tariffs on India.
"This year's forecast has been revised down by 0.2 percentage points compared to the June estimates. The revision reflects higher US import tariffs than previously anticipated and updated assumptions about the timing of tariff effects—from 2025 to early-to-mid 2026—and the subsequent recovery."
The report further notes that, excluding India, growth in the region is expected to strengthen to 5 percent in 2026 and 5.6 percent in 2027.
read more :- The rupee opened 07 paisa lower against the dollar at 90.25
Regards
Team Sis
Any query plz call 9111677775
https://wa.me/919111677775
