India GDP growth forecast raised to 7% for 2026: BofA Securities
Synopsis
BofA Securities has sharply upgraded India's 2026 GDP growth forecast to 7 per cent from 6.2 per cent — a revision driven by crude price correction, the US-Iran peace deal, and strong first-quarter prints. With EM Asia ex-China now projected at 5.9 per cent growth and Brent crude expected to average $65 in 2027, the tailwinds for India look unusually aligned — though a Fed tightening cycle starting September could test that optimism.
Key Takeaways
BofA Securities raised India's 2026 GDP growth forecast to 7 per cent , up from 6.2 per cent projected in April.
India's growth is also pegged at 7 per cent for 2027 , making it one of the fastest-growing major economies.
Brent crude is projected to average $72/bbl in H2 2026 and $65/bbl in 2027, assuming West Asia peace holds.
EM Asia (ex-China) growth upgraded to 5.9 per cent for 2026, from an April estimate of 4.9 per cent .
BofA forecasts 75 bps of US Fed rate hikes in 2026, starting September , posing a risk to global liquidity.
Crude prices have already corrected nearly 42 per cent from their 2026 peak to $72 per barrel .
Bank of America (BofA) Securities has revised its India GDP growth forecast upward to 7 per cent for 2026, a significant upgrade from its earlier estimate of 6.2 per cent in April, according to a report released on 30 June. The global brokerage also pegged India's growth at 7 per cent for 2027, signalling sustained momentum in Asia's third-largest economy.
Key Revisions in the BofA Report
BofA Securities marginally upgraded its global growth outlook to 3.2 per cent for 2026 and 3.5 per cent for 2027 — a 10-basis-point (bps) upward revision for both years compared to its April update. The firm also introduced an initial forecast for 2028 at 3.3 per cent, while marking down global inflation to 3 per cent in 2026, decelerating to 2.4 per cent in 2027 and 2.5 per cent in 2028.
The report cited stronger-than-expected first-quarter 2026 GDP prints, crude price correction, and the US-Iran peace deal as key drivers behind the improved outlook for emerging markets. BofA now expects EM Asia (excluding China) growth to expand by 5.9 per cent in 2026 — up sharply from its April projection of 4.9 per cent — before settling at 5.8 per cent in 2027.
Crude Oil Outlook and Strait of Hormuz Recovery
BofA Securities projected international oil benchmark Brent crude to average $72 a barrel in the second half of 2026 and $65 per barrel in 2027, on the assumption that peace holds in West Asia. Crude prices have already seen a sharp correction of nearly 42 per cent to $72 per barrel from their peak earlier this year.
Notably, following the reopening of the Strait of Hormuz, a new daily record of 78 vessel crossings was set on 24 June, representing a recovery to 57 per cent of pre-war volumes on a daily basis, according to a separate report. Lower crude prices are a direct tailwind for India, which imports over 85 per cent of its oil needs.
US Federal Reserve and Global Risk Factors
The report flagged that the global economy will likely face tighter financial conditions from the United States going forward, forecasting 75 bps of US Federal Reserve (Fed) rate hikes in 2026, beginning in September. BofA warned that the labour market has firmed up and inflation dynamics have deteriorated in the US.
'The labour market has firmed up and inflation dynamics have deteriorated in the US. While some one-offs are partly to blame, and tariffs should soon roll off, most of the FOMC seems to be losing patience after 5 years of high inflation,' the report stated.
The global economy is being shaped by US President Donald Trump's policies, the artificial intelligence (AI) boom, China's overcapacity, fiscal imbalances, and excess global liquidity, the report noted. BofA flagged that the AI boom and easy financial conditions have supported 'K-shaped dynamics' for the US and global economy, but warned this 'could turn into a source of weakness if there is a significant correction in asset prices.'
What This Means for India
The upgrade to 7 per cent growth places India firmly among the fastest-growing major economies globally, and comes amid a broader recalibration of emerging market expectations. Lower oil prices ease India's import bill and current account pressures, while stronger EM Asia momentum reflects resilient domestic demand and export recovery. This comes amid ongoing global uncertainty driven by Fed tightening expectations and geopolitical flux in West Asia.
All eyes will be on India's own macroeconomic data releases and the Reserve Bank of India's (RBI) next policy stance as the global rate cycle evolves.
Point of View
Hormuz open, and EM Asia re-rated. But the same report that upgrades India also warns of 75 bps of Fed hikes from September, which could tighten dollar liquidity and pressure the rupee. India's 7 per cent story is real, but it is not immune to a US-driven risk-off — and the window before September may be shorter than the headline suggests.
NationPress
30 Jun 2026
Frequently Asked Questions
What is BofA Securities' new GDP growth forecast for India?
BofA Securities has raised India's GDP growth forecast to 7 per cent for 2026, up from its earlier estimate of 6.2 per cent made in April. The firm also projects India's growth at 7 per cent for 2027.
Why did BofA upgrade India's GDP forecast?
The upgrade was driven by stronger-than-expected first-quarter 2026 GDP prints, a sharp correction in crude oil prices of nearly 42 per cent, and the US-Iran peace deal which eased West Asia tensions. These factors improved the outlook for EM Asia broadly, with India among the key beneficiaries.
What is BofA's outlook on Brent crude prices?
BofA Securities projects Brent crude to average $72 per barrel in the second half of 2026 and $65 per barrel in 2027, assuming peace holds in West Asia. Crude has already fallen nearly 42 per cent from its 2026 peak.
What risks does BofA flag for the global economy?
BofA flagged tighter US financial conditions as a key risk, forecasting 75 basis points of US Federal Reserve rate hikes in 2026 starting September. It also warned that the AI boom and asset price froth could turn from a source of resilience to a source of weakness if markets correct sharply.
How does India's forecast compare to the broader EM Asia outlook?
BofA now projects EM Asia (excluding China) growth at 5.9 per cent for 2026, sharply higher than its April estimate of 4.9 per cent. India at 7 per cent is well above the regional average, reflecting its stronger domestic demand base and lower direct tariff exposure.
