New Delhi, March 12: Renowned Japanese investment bank Nomura has projected that India’s economy will grow at a rate of 7% in the fiscal year 2027, despite ongoing conflicts in the Middle East.
Nomura further stated that if tensions in the Middle East persist, it will serve as a test for India’s “Goldilocks” period. This term refers to an economic condition where GDP growth is strong while inflation remains at minimal levels.
Sonal Verma, Nomura’s Chief Economist for India and Asia (excluding Japan), along with Aurodeep Nandi, noted in a report that for the fiscal year 2027, they are raising their current account deficit (CAD) forecast to 1.6% of GDP, an increase of 0.4%. They are also adjusting their Consumer Price Index (CPI) forecast upward to 4.5%, a rise of 0.7%, while slightly lowering their GDP forecast to 7.0%, a decrease of 0.1%.
According to Nomura, preliminary data for the first quarter of calendar year 2026 indicates that consumption and industrial momentum will continue. However, exports and government spending are expected to remain weak. Geopolitical tensions in West Asia may lead to energy shortages, particularly in natural gas, which could disrupt domestic industrial and service activities.
Nevertheless, Nomura anticipates a cyclical recovery in India due to previous policy easing, structural reforms, rising wages, and reduced trade tensions with the United States.
On rising energy prices, Nomura noted that this is increasing price pressures and could lead to higher inflation across more Asian economies, which currently maintain minimal levels.
Regarding interest rates, the investment bank indicated that most central banks may hold their repo rates steady due to the U.S.-Iran conflict. However, the possibility of interest rate hikes is beginning to emerge.
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