ADB Lifts India’s FY26 Growth Outlook to 7.2% After Strong Q3 Momentum

The Asian Development Bank (ADB) has sharply upgraded India’s economic outlook, projecting the country to grow 7.2% in FY26 — a significant jump from its earlier estimate of 6.5%. The revision comes close on the heels of India’s stronger-than-expected July–September quarter performance and improving fiscal conditions.

ADB said India’s robust third-quarter expansion, supported by tax relief measures that boosted household spending, played a major role in lifting its forecast. Its projection for 2026, however, remains unchanged at 6.5%.

The multilateral lender also revised upward its growth expectations for developing Asia and the Pacific, citing firming export demand, easing trade uncertainty after fresh agreements with the United States, and healthier financial conditions.

According to the ADB’s Asian Development Outlook (ADO) December 2025, regional growth is now pegged at 5.1% for this year, higher than the 4.8% projected in September. The forecast for next year has also been nudged up to 4.6%.

The bank highlighted that resilient exports — especially semiconductors and other high-technology goods — along with cooling inflation and stable markets, have strengthened the region’s prospects.

Also Read: India GDP Roars 8.2% in Q2 FY26: Beats Forecasts on Manufacturing Boom & Viksit Bharat Push | Republic World

“Asia and the Pacific’s strong fundamentals continue to support steady growth, even amid an unusually uncertain global trade environment,” noted ADB Chief Economist Albert Park. He added that while trade agreements have helped ease some concerns, risks tied to market volatility, geopolitical tensions, and China’s struggling property sector could still pose challenges.

Inflation across developing Asia is expected to soften further to 1.6% in 2025, aided largely by lower-than-anticipated food prices in India. The inflation outlook for 2026 remains unchanged at 2.1%.

In recent months, several global research houses have echoed similar optimism about India’s trajectory. Institutions such as Morgan Stanley, S&P Global and Goldman Sachs have highlighted India’s steady domestic demand, improving investment cycle and strong macro fundamentals, noting that the country remains one of the fastest-growing major economies despite global headwinds.