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Morgan Stanley Revises India’s Growth Forecast Upward to 6.2% for FY26, 6.5% for FY27.

Economy Business | Dated: 24 May 2025

On May 21, 2025, global financial services firm Morgan Stanley revised its outlook for India’s economic growth, upgrading its forecast to 6.2% year-on-year (YoY) for Financial Year (FY) 2026, up from an earlier estimate of 6.1%, and to 6.5% for FY 2027, up from 6.3%.

🎯 Key Highlights:

  • - The upgrade comes amid easing United States-China trade tensions, which have marginally improved the outlook for external demand.
  • - Morgan Stanley noted that India's growth momentum will be mainly sustained by strong domestic demand, given ongoing global uncertainties.
  • - The report highlighted that easier monetary policy and continued fiscal emphasis on capital expenditure are expected to further reinforce economic growth and The Reserve Bank of India (RBI) has projected a GDP growth rate of 6.5% for FY 2026.

💡 Other Important Facts:

  • (i) SBI Research has projected India’s GDP growth for Q4 FY25 at 6.4–6.5%, pointing to a mild slowdown in economic activity, with full-year FY25 growth estimated at 6.3%, assuming stable Q1–Q3 data from the NSO.
  • (ii) The forecast is based on SBI’s proprietary ‘Nowcasting Model’, which tracks 36 high-frequency indicators tied to sectoral consumption and demand trends.
  • (iii) The report flags a slowdown in manufacturing, with IIP growth dropping from 4.1% in Q3 FY25 to 3.6% in Q4 FY25, amid rising global uncertainty—highlighted by the IMF’s global growth projections of 2.8% in 2025 and 3% in 2026.

📚 Test Your Knowledge:

Recently, what is the revised GDP growth forecast for India for FY26 as per Morgan Stanley?

Correct Answer: 6.2%

🚀 Quick Recap: