Asian Development Bank (ADB) on Wednesday revised India’s GDP growth forecast for 2026 (FY27) to 7.0 per cent, up 40 basis points (bps) from its earlier projection of 6.6 per cent.
For South Asia, the growth forecast for this year is revised up to 6.4 per cent from 6 per cent in July, “driven by strong public investment and firm export growth in India,” it said in a statement.
However, economic growth in developing Asia and the Pacific will moderate from 5.5 per cent in 2025 to 5 per cent this year, before edging up to 5.1 per cent in 2027 (FY28), according to the report.
The 2026 forecast is 0.1 percentage points higher than the previous outlook in July.
“The region has remained resilient, but the risks are growing,” said ADB President Masato Kanda.
A strengthening El Nino with drier conditions means smaller harvests and reduced hydropower, pushing food and energy prices higher, and hitting the most vulnerable the hardest.
“The prolonged energy crisis and renewed risks in financial markets make it even more important for governments to prepare and protect the people most exposed. ADB is strongly supporting such efforts,” Kanda noted.
Strong investment, government stimulus, and robust technology exports driven by the global artificial intelligence (AI) investment cycle are supporting growth, even as geopolitical tensions and a strengthening El Nino push up energy and food prices, said the ADB.
In the Asian Development Outlook (ADO) September 2026, ADB trimmed its regional inflation forecast for 2026 to 4.2 per cent from 4.3 per cent in July, as price stabilisation measures partly offset the impact of persistently high energy prices.
The 'ADO September 2026' outlook identifies two main risks to the region’s growth and inflation outlook. The first is escalating conflict, particularly a broadening of the Middle East conflict and an intensification of Russia’s war in Ukraine, which could keep global energy prices elevated and volatile, and spill over to other commodities.
The second is a very strong El Nino, forecast to persist through the first quarter of 2027, which could raise energy demand and lower agricultural production, pushing up fuel and food prices.
A sharp correction in AI-related equity valuations, tightening financial conditions, and renewed trade policy uncertainty pose further downside risks, it noted.
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