Higher economic growth is driven by a better-than expected domestic demand momentum and hopes of India-US BTA

PTI mumbai

Swiss brokerage UBS on Tuesday raised its FY26 GDP growth forecast for India to 6.4% from an earlier 6%, underlining that economic momentum is holding up despite the trade war. Official data released last week said India's economic growth slowed to 7.4% in the March quarter, bringing down the annual growth rate to 6.5% during 2024-25.

In FY24, the economic growth was 9.2%. UBS said its expectation of a higher economic growth is driven by a better-than expected domestic demand momentum, a likely easing of tariffs on Chinese imports, hopes of cinching an US-India trade deal, and the tailwind of lower global crude oil prices. "We now raise our forecast of India's FY26 real GDP growth to 6.4 per cent from 6 per cent.

Our higher GDP forecast assumes no significant increase in the effective tariff rate against India and the overall global tariff situation remaining the same," it said. The brokerage said its composite economic indicator suggests economic momentum held up in April despite the trade war.

It expects household consumption growth to pick up and become broad based as rural consumption gathers pace on hopes of a favourable monsoon and lower food prices, and an improvement in urban demand on policy stimulus including income tax relief, lower inflation and rate cuts.