Macro buffers to help India tide over Gulf crisis: World Bank

New Delhi: India’s growth projection of 6.6% for FY27 faces downside risks from the Gulf conflict, but the economy remains well placed to navigate the global energy shock, supported by strong macroeconomic buffers, the World Bank said on Thursday.

The country is expected to remain among the fastest-growing major economies. Growth for FY27 reflects the impact of higher global energy prices due to the Middle East conflict and is expected to average 7.1% in FY28-29, it noted.The World Bank has assumed oil prices at $90-100 per barrel for FY27.

Despite external risks, macroeconomic strength and policy measures are expected to provide some insulation. However, the multilateral lender flagged energy diversification, prudent fiscal management and trade liberalisation as key priorities.

Aurelien Kruse, lead economist for India at the World Bank, said the country entered the current fiscal year from a position of strength.

“Substantial foreign reserves, low inflation, predominantly rupee-denominated public debt, a healthy financial sector, and trade diversification efforts play a major role in providing resilience from external headwinds,” said the World Bank. The Reserve Bank of India expects growth of 6.9% for FY27. Without the ongoing conflict, growth was estimated at 7.2%, supported by stronger-than-expected performance in FY26, the World Bank said.

India’s gross domestic product (GDP) growth is expected at 7.6% in FY26, driven by private consumption, manufacturing, exports and investment, despite high tariffs imposed by the US.

Inflation is projected to rise to 4.9% in FY27, according to the World Bank, due to higher food prices, partial pass-through of global energy prices and currency depreciation pressures. Elevated energy prices are also likely to raise input costs for industry.

“Boosting private sector-led growth will be critical to strengthening economic resilience and supporting more young people to enter the workforce,” said Paul Procee, acting country director for India at the World Bank.

He added that achieving the goal of Viksit Bharat will require a predictable, business-friendly environment to unlock investment and create jobs at scale in sectors such as energy and infrastructure, manufacturing, tourism, healthcare and agribusiness.

New Delhi: India’s growth projection of 6.6% for FY27 faces downside risks from the Gulf conflict, but the economy remains well placed to navigate the global energy shock, supported by strong macroeconomic buffers, the World Bank said on Thursday.

The country is expected to remain among the fastest-growing major economies. Growth for FY27 reflects the impact of higher global energy prices due to the Middle East conflict and is expected to average 7.1% in FY28-29, it noted.

The World Bank has assumed oil prices at $90-100 per barrel for FY27.

Despite external risks, macroeconomic strength and policy measures are expected to provide some insulation. However, the multilateral lender flagged energy diversification, prudent fiscal management and trade liberalisation as key priorities.

Aurelien Kruse, lead economist for India at the World Bank, said the country entered the current fiscal year from a position of strength.

“Substantial foreign reserves, low inflation, predominantly rupee-denominated public debt, a healthy financial sector, and trade diversification efforts play a major role in providing resilience from external headwinds,” said the World Bank.

The Reserve Bank of India expects growth of 6.9% for FY27.

Without the ongoing conflict, growth was estimated at 7.2%, supported by stronger-than-expected performance in FY26, the World Bank said.

India’s gross domestic product (GDP) growth is expected at 7.6% in FY26, driven by private consumption, manufacturing, exports and investment, despite high tariffs imposed by the US.

Inflation is projected to rise to 4.9% in FY27, according to the World Bank, due to higher food prices, partial pass-through of global energy prices and currency depreciation pressures. Elevated energy prices are also likely to raise input costs for industry.

“Boosting private sector-led growth will be critical to strengthening economic resilience and supporting more young people to enter the workforce,” said Paul Procee, acting country director for India at the World Bank.

He added that achieving the goal of Viksit Bharat will require a predictable, business-friendly environment to unlock investment and create jobs at scale in sectors such as energy and infrastructure, manufacturing, tourism, healthcare and agribusiness.