New Delhi: Investment titan Morgan Stanley has turned more bullish on the Indian economy, revising its growth forecast for the 2027 fiscal year upward to 6.7 per cent. This update comes as a notable shift from the 6.2 per cent projection issued in April, suggesting that the South Asian giant may be better equipped to handle the lingering tremors of the West Asia conflict than previously anticipated. The upgraded outlook is largely driven by a recalibration of energy costs, with analysts now expecting crude oil to average around USD 87.5 per barrel in FY27, down significantly from the earlier, more pessimistic estimate of USD 95 per barrel.
While the immediate future looks brighter, the journey toward the end of the decade is expected to have its share of turbulence. According to Chief India Economist Upasana Chachra, the energy shock is likely to be most acute in the quarter ending June 2026, where growth could dip to 6.5 per cent amid a cocktail of high commodity prices and stubborn supply chain frictions. However, the firm expects a steady normalisation of economic activity thereafter, with growth potentially accelerating to 7 per cent in FY28 as supply-side constraints begin to ease and the global trade environment stabilizes near the centre of historical trends.
The global backdrop remains a mixed bag for Indian exporters, as the world’s major economies appear to be losing some steam. Morgan Stanley anticipates that global growth will moderate to 3.2 per cent in 2026, with the United States and Europe projected to grow at a modest 2.2 per cent and 0.6 per cent, respectively. While these figures are lower than previous estimates and suggest a cooling of external demand for goods, India’s robust services sector is expected to act as a crucial buffer. The outperformance of service exports remains a key pillar of resilience, helping to offset the higher freight and insurance costs triggered by ongoing regional tensions.
Despite the upgraded forecast, analysts have issued a stern warning regarding the volatility of the energy market. They noted that if oil prices remain stubbornly high for an extended period, the resulting burden on consumers and corporations could lead to non-linear and increasingly damaging impacts on the national GDP. For now, the focus remains on the evolving trade relationship between India and the United States, as well as the duration of geopolitical instability in West Asia, both of which will play a decisive role in determining the final trajectory of the country’s economic expansion over the coming years.
