Falling crude oil prices and stable inflation to drive India’s growth amid global slowdown, says EY report
India’s economy is expected to expand by 6.5% in the financial year 2025-26, backed by declining crude oil prices and manageable inflation levels, despite increasing global trade tensions and a slowing international economy, according to EY’s latest Economy Watch report released on Friday, reported timesofindia.indiatimes.com.
EY outlines key global factors influencing India’s growth outlook, including lower exports, global slowdown, falling crude prices, and surplus production capacities.
D.K. Srivastava, Chief Policy Advisor at EY India, noted, “With suitable fiscal and monetary policies, India may be able to sustain real GDP growth at about 6.5% in FY26 and in the medium term, while keeping CPI inflation below 4%.”
A major driver is the sharp fall in global oil prices — from $75 per barrel in early April to around $65 mid-month — expected to remain stable between $60–65 through FY26. This is anticipated to ease inflationary pressures and bolster domestic economic activity.
While India’s exports might face headwinds from rising tariffs and slowing global demand, EY believes the overall GDP impact will be contained, given the historically smaller contribution of net exports to India’s growth. To navigate these challenges, EY recommends India adopt anti-dumping measures and recalibrate its crude sourcing strategies, including boosting oil imports from the US.
EY urges strategic responses, including new trade agreements and reforms, to strengthen India’s economic position amid global uncertainties.
The report also advocates for finalizing a bilateral trade agreement with the US by late 2025 and strengthening economic ties with the UK, EU, and other regional players. It stresses that India’s long-term resilience depends on reforms in land and labour laws, investment in education, skills, and emerging technologies like AI, and expansion of the Production-Linked Incentive (PLI) scheme.
India’s 6.5% growth forecast for FY26 aligns with estimates by several global institutions. The IMF and World Bank project growth rates of 6.2% and 6.3% respectively, while the Reserve Bank of India and S&P Global Ratings echo EY’s 6.5% estimate. Meanwhile, OECD and Fitch have set slightly lower forecasts at 6.4%.
These projections arrive amidst rising global trade uncertainty after US President Donald Trump announced new reciprocal tariffs on imports, heightening concerns of a global trade war.