UBS raises India’s FY26 GDP growth forecast to 6.4% citing domestic demand amid trade tensions

Swiss brokerage UBS has revised its forecast for India’s FY26 GDP growth to 6.4% from the sooner 6%, citing resilient financial momentum regardless of ongoing international trade tensions.This revision comes after official information final week confirmed India’s economic system grew by 7.4% within the March quarter, pulling the full-year 2024-25 GDP growth down to 6.5%, in contrast with 9.2% in FY24.UBS attributed the improve to stronger-than-expected domestic demand, expectations of eased tariffs on Chinese imports, potential progress on a US-India trade deal, and help from decrease international crude oil costs.“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,” UBS stated in a be aware.The brokerage’s composite financial indicator exhibits momentum held agency in April, regardless of the intensifying trade warfare atmosphere. It anticipates family consumption to turn into extra broad-based, helped by rural demand restoration — pushed by a beneficial monsoon and softening meals costs — in addition to city consumption supported by tax reduction, easing inflation, and potential rate of interest cuts.However, UBS sees capital expenditure growth slowing barely in FY26 due to dangers resembling China’s potential dumping of extra manufacturing capability and international uncertainty curbing personal funding. It additionally flagged the opportunity of weaker capex from Indian states due to stretched steadiness sheets.On the exterior entrance, items exports could underperform amid comfortable international trade, though companies exports are possible to keep resilient. The Reserve Bank of India is predicted to play a key position in supporting growth, with the brokerage anticipating fee cuts of fifty–75 foundation factors to enhance financial exercise.