World Bank Raises India’s FY27 Growth Forecast To 6.6% On Back Of FTAs, Robust Domestic Demand

The Indian economy is expected to grow at a rate of 6.6 percent in financial year 2026-27, according to the latest report of the World Bank on South Asia’s economic outlook amid the West Asia crisis.

The global lender had earlier projected a growth of 6.3 percent for the Indian economy.

The upward revision comes even as the South Asian region is reeling under severe energy disruptions due to the United States-Israel-Iran war.

The latest report highlighted recently signed free trade agreements and robust domestic demand as the key reasons behind the upward revision.

“India’s new FTAs with the European Union and the United Kingdom comprise tariff cuts on more than 95 percent of traded goods, along with trade facilitation measures for both goods and services,” the report mentioned.

The two FTAs provide Indian consumers and firms with easier access to cheaper imported final goods and intermediate inputs, as well as greater foreign market access for exporters, it said.

Moreover, Indian exports would also get a boost. According to the report, about half of India’s total exports in 2024 were shipped to advanced economies.

At about 23 percent of total exports, India not only exported more goods and services to the European Union and the United Kingdom than to any other advanced-economy region, but it also exported a larger share to European markets than many other major EMDEs (Emerging Market and Developing Economies).

The report said that India’s robust growth numbers will lift the collective economic growth prospects of the South Asian region.

It said that the region’s economic growth is expected to slow to 6.3 percent in 2026 amid dislocations in global energy markets.

Still, South Asia remains the fastest-growing EMDE region, thanks to the strength of India’s economy. The rest of the region is expected to grow at a pace comparable to other EMDEs.

However, it also warned of downside risks to growth. It said the region’s growth prospects could be dampened by more persistent global energy market dislocations or by adverse spillovers from the adoption of artificial intelligence in major export markets.