NewsStocksBank of America Upgrades India GDP Forecast to 7.6% on Strong Economic Data and Policy SupportBank of America Upgrades India GDP Forecast to 7.6% on Strong Economic Data and Policy Support
Bank of America has upgraded India's GDP growth forecast for FY26 to 7.6% from 7.00%, citing strong economic data including 8.2% growth in the September quarter and supportive policy measures. The brokerage also raised its FY27 estimate to 6.8% from 6.5%, while highlighting the positive impact of RBI's multiple rate cuts under Sanjay Malhotra and improved high-frequency indicators including fuel consumption, auto sales, and credit growth in November and December.
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Bank of America Corp has significantly upgraded India's economic growth forecast for fiscal year 2026 to 7.6%, marking a substantial increase from its previous estimate of 7.00%. The revision reflects the brokerage's confidence in India's economic trajectory, driven by stronger-than-expected data and robust policy support measures.
Strong Economic Performance Drives Forecast Revision
The upgrade comes on the back of impressive economic data, with India's GDP expanding by 8.2% in the September quarter. This represents the fastest pace of growth recorded in six quarters, demonstrating the economy's resilience and momentum. Bank of America noted that incoming data warrants the GDP forecast upgrade, indicating broad-based improvements in economic activity towards the end of 2025.
| Economic Indicator | FY26 Forecast | Previous Estimate | Change |
|---|---|---|---|
| GDP Growth Rate | 7.6% | 7.00% | +0.6% |
| FY27 GDP Forecast | 6.8% | 6.5% | +0.3% |
| September Quarter Growth | 8.2% | - | Fastest in 6 quarters |
Policy Support Strengthens Economic Foundation
Bank of America highlighted that policy support is expected to be a major theme going forward, playing a crucial role in sustaining growth improvement. The economy is benefiting from a supportive monetary environment, with the Reserve Bank of India under Sanjay Malhotra implementing multiple rate cuts in 2025. This monetary easing, combined with a broadly expansionary fiscal stance, has helped the country maintain economic momentum.
High-Frequency Indicators Show Positive Momentum
The brokerage firm noted that consumption and spending have picked up significantly, alongside firmer investment data. Several high-frequency indicators have demonstrated acceleration in November and December, reinforcing the decision to upgrade the near-term forecast:
- Fuel consumption showing increased activity
- Auto sales demonstrating robust growth
- Credit growth indicating expanded lending and investment
These indicators collectively support the improved economic outlook and validate the forecast revision.
Cautious Optimism for FY27 Outlook
Looking beyond the current fiscal year, Bank of America also upgraded its GDP estimate for fiscal year 2027 to 6.8% compared to the previous estimate of 6.5%. However, the firm maintained relative caution regarding the FY27 outlook, warning about potential lagged effects of global trade measures, including tariff-related headwinds. The brokerage noted that India remains one of the few major countries yet to reach a trade agreement with the United States, which has impacted sentiment in the domestic market.
Alignment with Central Bank Projections
The Bank of America upgrade aligns with broader optimism in the Indian economy, as the Reserve Bank of India recently revised its FY26 growth forecast upward to 7.3%. This convergence of forecasts from both domestic and international institutions underscores the strengthening economic fundamentals and positive trajectory of India's growth story.
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