UBS Ups India's FY26 GDP Forecast Amid Trade Tensions

UBS has raised its FY26 GDP growth forecast for India to 6.4% from 6%, citing domestic demand momentum and potential tariff easing. Despite a slowed growth to 7.4% in the March quarter, the brokerage sees optimism in the US-India trade deal and lower global oil prices supporting economic prospects.

On Tuesday, Swiss brokerage UBS updated its economic forecast, raising India's FY26 GDP growth projection to 6.4% from a previous estimate of 6%. This revision underscores the country's economic resilience amidst ongoing trade tensions.

The adjustment follows official reports indicating that India's GDP growth slowed to 7.4% in the March quarter, reducing the annual growth rate to 6.5% for 2024-25 from 9.2% in FY24.

UBS attributes the optimistic outlook to a stronger domestic demand, an anticipated reduction in Chinese import tariffs, potential US-India trade agreements, and globally declining crude oil prices. However, it warned of risks from China's manufacturing capacity and international uncertainties affecting private investments.