HSBC slashes FY27 GDP estimate sharply to 6%

Expects two RBI rate hikes 

PTI New Delhi

Twin shocks of an energy crisis and deficient rainfall will lead to real GDP growth falling to 6% in FY27 from 7.4% in FY26, HSBC said in a report on Monday. The foreign brokerage warned that these shocks would stoke inflation and may prod the RBI to hike key lending rates twice in the current fiscal.

Bringing together both shocks and factoring in some fiscal slippage, the brokerage forecast GDP growth at 6% in FY27, lower than its forecast of 7.4% for the previous year. The report warned that the emerging crises would be a major blow to the formal sector, including rural households and small firms. 

The Reserve Bank expects GDP growth to come in at 6.9% for 2026-27, according to an estimate released last month. However, the conflict in West Asia has led to a sharp surge in oil prices, with crude continuing to trade above $100 per barrel. HSBC economists argued that the twin crises and deficient rainfall due to El Nino warrant closer attention on the FY27 outlook, adding that higher temperatures will also dent activity. "Our model suggests the El Nino/temperature channel can add 0.5 percentage point to inflation over a year," the report said, pegging headline inflation at 5.6% in FY27. 

GDP growth likely to touch 6.6% in FY27: Crisil 

India’s gross domestic product (GDP) is expected to grow 6.6% in fiscal 2027 while retail inflation will average 5.1% in FY27 amid geopolitical tensions, according to a report from Crisil Ratings released on Monday. The report noted that the prolonged closure of the Strait of Hormuz has pushed Brent crude price forecasts up to $90 to $95 per barrel from the previous range of $82 to $87. Prices are expected to remain elevated for longer. The de facto shutdown of the strait for over two months has created the largest energy shock on record, with S&P Global estimating supply losses of at least 10% of global oil and derivatives output.