Overview

• ADB held its FY26 forecast at 6.5% and trimmed FY27 to 6.5%, pointing to newly elevated U.S. tariffs that are set to curb exports in the second half of FY26 and into FY27.
• India’s economy expanded 7.8% in Q1 FY26 and manufacturing and services PMIs hit multi‑year highs, indicating strong near‑term momentum.
• The lender lowered its FY26 inflation forecast to about 3.1%, with core near 4%, signaling scope for additional policy support if needed.
• The RBI has already cut the repo rate to 5.5% through three moves this year and announced phased CRR reductions to ease liquidity.
• ADB projects the current account deficit to widen to 0.9% of GDP this year and expects the fiscal gap to exceed the 4.4% budget target but remain below last year’s 4.7%.