OECD cuts India’s growth forecast for FY26 and FY27, forecasts 6.4% growth in FY25

OECD cuts India's growth forecast

Organisation for Economic Co-operation and Development, on Monday, cut India’s growth forecast to 6.4 percent for FY26 from 6.9 percent projected earlier, as it projected uncertainty to loom large.

The 38-member body of developed nations projected lower growth for FY27 as well, cutting India’s growth forecast to 6.6 percent from 6.8 percent earlier.

However, there is likely to be some cheer for the government, as growth is projected to rise from 6.3 percent in the current fiscal to 6.4 percent.

India is also likely to remain the fastest-growing major economy over the next two years.

OECD seems to be less emphatic than RBI about India’s growth prospects. In its outlook released in February, the central bank’s monetary policy committee kept the growth forecast at 6.7 percent for FY26. The Economic Survey pegged growth between 6.3 percent and 6.8 percent for FY26.

“The global economy has shown some real resilience, with growth remaining steady and inflation moving downwards. However, some signs of weakness have emerged, driven by heightened policy uncertainty,” said Mathias Cormann, OECD Secretary-General Mathias Cormann.

OECD was also less optimistic than RBI on the inflation front, as it projected inflation to be at 4.5 percent for the coming fiscal compared with the 4.2 percent projected earlier, which was in sync with RBI’s outlook.

“Increasing trade restrictions will contribute to higher costs both for production and consumption. It remains essential to ensure a well-functioning, rules-based international trading system and to keep markets open,” Cormann noted.

For FY27, OECD projected inflation to fall to 4.1 percent.