India: Growth seen moderating in early 2026 – DBS

DBS Group Research economists Radhika Rao and Daisy Sharma use their GDP Nowcast model to assess India’s real GDP trajectory. They note that India’s 4Q FY25 growth remained strong but is likely to ease in 1Q26. The Nowcast points to slower industrial activity, weaker freight and exports, and softer vehicle sales, with full-year 2026 growth projected at 6.5%.

DBS Nowcast signals slower India momentum

"Based on India’s rebased GDP series, real GDP rose 7.8% yoy in Oct-Dec25 (4QFY25) from 8.4% in Jul-Sep25. This quarter benefitted from indirect tax rationalization, festive demand, firmer investment activity, and improved rural farm outcomes."

"The rebased series also suggests a modest but meaningful firming in activity in FY26. Real GDP growth for FY26 was revised up to 7.6% from the first advance estimate of 7.4%, broadly converging toward our 7.7% forecast."

"As per our Nowcast model, growth is expected to moderate to 7.2% in 1Q26. "

"The slowdown in Q1 growth will mostly be driven by weak industrial activity, freight traffic, exports of goods and moderation in passenger and commercial vehicle sales."

"We expect full year growth to average 6.5% (CY26), with upside risks, from 7.8%."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)