Key Details
The OECD Economic Outlook, Interim Report September 2026: Weathering Successive Shocks shows stronger near-term growth in India, followed by moderation. India’s figures refer to fiscal years beginning in April; the global figures refer to calendar years.
Indicator | OECD Projection |
|---|---|
India GDP growth, FY 2026–27 | 7.1%, up 0.8 percentage points from the June forecast |
India GDP growth, FY 2027–28 | 6.5%, up 0.1 percentage points from June |
India inflation | 4.7% in FY 2026–27, easing to 4.2% in FY 2027–28 |
Global GDP growth | 2.9% in 2026 and 3.0% in 2027 |
G20 inflation | 4.1% in 2026, easing to 3.6% in 2027 |
These projections are based on information available up to 16 September 2026.
Growth Has Held Up, but the Energy Shock Persists
The Middle East conflict has disrupted oil and gas supplies and raised fuel costs. Global growth has proved more resilient than expected because countries drew on inventories, found alternative supplies and supported households and firms. AI-related investment and trade provided another offset.
Those buffers may weaken if disruptions continue. The OECD’s baseline assumes energy prices begin easing in 2027; its modest global recovery depends in part on that assumption.
India’s Upgrade Coexists With a Slower Growth Path
The OECD projects India’s growth at 7.1% in FY 2026–27, against 7.8% in FY 2025–26. It credits resilient domestic demand and government measures cushioning the energy shock for recent strength, but expects reduced purchasing power to slow activity later in 2026. Growth is projected to ease further to 6.5% in FY 2027–28.
The report also identifies India among the major economies facing one of the largest increases in effective US tariff rates, after accounting for the goods affected. Its higher growth forecast therefore reflects stronger recent momentum, not an absence of external pressure.
Food and Financial Risks Could Compound the Shock
A very strong El Niño could weaken India’s monsoon, affect agricultural output and add to food-price pressure. The OECD also warns that prolonged Gulf supply disruptions, higher government borrowing costs or disappointing returns on AI investment could weigh on the global economy.
In an illustrative combined-shock scenario, the OECD estimates global growth in 2027 would be 0.7 percentage points lower and inflation 1.1 percentage points higher than in its baseline. This is a stress test, not its forecast for India or the world.
Policy Relevance
Energy relief has a fiscal trade-off. The OECD recommends support targeted at those most affected, with a clear end date, so it can cushion prices without becoming a continuing budget commitment.
Food and fuel risks need to be read together. A weaker monsoon alongside high energy or fertiliser costs would put greater pressure on household budgets than either shock alone.
The RBI’s response depends on how inflation develops. The OECD projects a temporary increase in Indian policy rates, but that is the OECD’s forecast, not an RBI decision. The policy question is whether higher food and energy prices spread into broader, persistent inflation.
Follow the Full Report Here: OECD Economic Outlook, Interim Report September 2026: Weathering Successive Shocks