India To Grow at 6.5 PC in FY27: UNCTAD

 Chennai: The UN's trade and development body projects India’s growth to slow down to 6.5 per cent in FY27 and global growth to slow to 2.6 per cent in 2026 from 2.9 per cent in 2025 as higher energy prices, transport disruptions, market volatility and search for financial safe assets weigh on investment and demand. Global merchandise trade growth is projected to fall from 4.7 per cent in 2025 to 2.5 -1.5 per cent.

In India, GDP growth will slow from 7.6 per cent in FY26 to 6.5 per cent in FY27, but will still remain robust with economic activity supported by domestic demand, continued public investment in infrastructure, and expansion in services and manufacturing sectors. Government initiatives aimed at improving logistics, digital infrastructure and financial services are also contributing to productivity gains, finds UNCTAD.

Recent trade agreements with the European Union and the United States may support exports, but also imports, on top of more costly oil imports, which represent over 20 per cent of its trade balance.

The global economy entered 2026 stronger than expected, supported by dynamic trade, expanding industrial production in developing economies and strong investment linked to artificial intelligence (AI).

But the outlook changed quickly after geopolitical tensions intensified in late February 2026. Conflict in the Middle East disrupted energy markets, financial conditions and major shipping routes, including through the Strait of Hormuz, a critical route for global oil and gas trade.

It has led to a 60 per cent surge in oil prices, doubling of gas prices and increased financial volatility across bond, equity and currency markets.

Some developing countries have introduced measures to manage rising fuel costs, stretch supplies or cap prices. These include India, Bangladesh, Brazil, Egypt, Ethiopia, Indonesia, Mexico, Pakistan, Philippines, and Sri Lanka.

Currencies of developing economies weakened against the dollar. Emerging market equities fell by more than 12 per cent between 28 February and 29 March 2026 and external sovereign bond yields increased for both emerging and frontier-market economies.

The report warns that frontier-market economies are especially vulnerable in a prolonged conflict because their financial markets are smaller and less liquid.