Downside risks to economy have begun materialising: Crisil report

ANI New Delhi

The ongoing West Asia conflict has begun materialising as a major downside risk for the Indian economy, severely impacting international trade and inflating import costs. According to a report by Crisil Intelligence, the downside risks to the economy have begun materialising with over two months of unresolved West Asia conflict.

The agency further noted that the closure of the Strait of Hormuz has created the largest energy shock on record. This will take time to normalise because of the damage to oil and gas infrastructure in West Asia, even after the route reopens. The economic fallout is expected to hit India's import-dependent manufacturing sector particularly hard, while weaker global demand and trade bottlenecks stifle export growth.

As a direct consequence of these compounding external pressures, India's macroeconomic indicators show signs of strain. The report noted that the real gross domestic product (GDP) growth is projected to slow down to 6.6% in fiscal 2027, compared to the 7.6% growth recorded in fiscal 2026. Simultaneously, the country's CAD is projected to widen significantly to 2.2% of GDP in fiscal 2027 from an estimated 0.8% in the previous fiscal year.