Nomura flags FY27 slowdown, growth rebound to 7.2% in H2

What Nomura is signalling on FY27 growth

Nomura expects India’s economic growth to soften in the first half of FY27 before strengthening later in the year, as supply-side constraints weigh on activity even as demand stays steady. The global brokerage described the likely slowdown as temporary rather than a long-term decline. It said steady demand conditions could limit the downside, while policy support may help the recovery later in the year.

The view comes amid concerns around geopolitical tensions in West Asia and the risk of higher energy prices. Nomura warned that a prolonged conflict could add to inflation pressures and worsen India’s external balance, even if the economy remains resilient.

First-half FY27: growth seen moderating to 6.3%–6.7%

Nomura estimates India’s GDP growth could be in the range of 6.3% to 6.7% in the first half of FY27. The brokerage linked the early-year moderation to supply issues that could constrain activity in some pockets of the economy.

Even with these constraints, Nomura does not see a sharp deterioration in underlying demand. The report noted that demand conditions are still seen as strong, which could prevent a deeper slowdown. It also said growth may remain stable overall, even if certain sectors face near-term pressure.

Second-half FY27: rebound projected to 7.1%–7.2%

Nomura expects growth to improve in the second half of FY27. It projects GDP growth of around 7.1% to 7.2% later in the year, supported by policy measures and easing global pressures.

In Nomura’s framing, the second-half recovery reflects the combination of steady demand, policy support and some relief from external headwinds, provided energy-related disruptions do not intensify.

Full-year FY27: 6.8% in one note, 7.0% in another

Across the material, Nomura’s FY27 full-year growth call appears in two ways. One report pegged full-year growth at 6.8% while still expecting a late-year improvement. A separate update from Nomura projected FY27 growth at 7.0%, after trimming the earlier estimate of 7.1%.

In that trimmed forecast, Nomura said growth is expected to slow slightly to 7.0% in FY27 from an estimated 7.6% in FY26, citing potential spillover effects from global fuel supply shocks. The firm’s note also said the FY27 revision was made amid the ongoing West Asia conflict.

Inflation and external balance: CPI seen at 4.5%, CAD at 1.6%

Nomura raised its inflation forecast for FY27 to 4.5% from an earlier estimate of 3.8%. Alongside this, it expects India’s current account deficit (CAD) to rise to 1.6% of GDP, up by 0.4 percentage points from previous projections.

Nomura’s reasoning links these revisions to energy-related risks and the possibility of broader spillovers into prices. It also flagged that prolonged regional conflict could pressure inflation and India’s external balance, amplifying the importance of crude oil and fuel supply developments.

Energy risk: natural gas shortages and fuel price pass-through

Nomura highlighted the risk of energy shortages, especially natural gas, due to geopolitical tensions in West Asia. It said such shortages could disrupt industrial and services activity in India.

On inflation mechanics, Nomura said its higher FY27 inflation forecast reflects expectations of further price increases for LPG, transport (air and road), restaurants and accommodation, along with broader spillover effects. It also laid out an assumption that petrol and diesel prices remain unchanged, with oil marketing companies absorbing the shock, potentially supported later by the government through possible cuts in fuel taxes.

Nomura added a sensitivity point: if oil prices were passed through, every 10% increase could add around 0.5 percentage points to inflation.

Oil price assumptions cited in the note

Nomura said it raised its 2027 estimates up to $17 per barrel on average for the year, before moderating to $17.50 per barrel in 2028. It also provided WTI quarterly average estimates of $13 per barrel, $10 per barrel, and $18 per barrel for Q2, Q3 and Q4 of 2026, and $12 per barrel for 2027.

What early 2026 data is showing, according to Nomura

Nomura said early data for Q1 of calendar year 2026 suggests consumption and industrial activity remain strong. At the same time, it pointed to weaker exports and government spending.

This mix matters for how the FY27 profile could evolve. Strong domestic momentum can cushion a supply-led slowdown, but weaker exports and fiscal impulses can limit upside if external conditions remain volatile.

Policy and structural drivers Nomura highlighted

Despite the risks, Nomura said India will continue to see a cyclical economic recovery supported by past policy easing, structural reforms, rising wages and easing trade tensions with the United States. In Nomura’s view, these factors help keep the broader growth picture resilient even when near-term shocks raise uncertainty.

The brokerage also referred to the risk that West Asia tensions, if sustained, could test the “Goldilocks” mix of robust growth and stable inflation.

How Nomura’s view sits alongside other FY27 projections mentioned

Beyond Nomura’s forecasts, the material also referenced other published projections that frame the broader debate on FY27 growth. India’s Economic Survey projected real GDP growth in the range of 6.8% to 7.2% for FY27 and revised its assessment of India’s potential growth rate to 7.0% from 6.5% three years ago.

Separately, Goldman Sachs Research was cited expecting India’s real GDP to grow 6.8% year-on-year in 2027. Deloitte’s optimistic scenario described growth in fiscal 2026-27 likely between 6.6% and 6.9%.

Key numbers at a glance

The core forecast set can be summarised as follows, based on the figures explicitly stated across the notes.

Why the update matters for markets and policy watch

Nomura’s split-year profile for FY27 suggests investors may need to track two parallel issues. One is whether supply constraints, including any energy-linked disruptions, show up in industrial and services activity as the year begins. The second is whether policy support and easing global pressures arrive quickly enough to lift growth in the second half as projected.

The raised inflation and CAD forecasts also sharpen the focus on fuel prices and oil market volatility. With Nomura explicitly linking a 10% oil price pass-through to about 0.5 percentage points of inflation, energy becomes a key variable shaping the macro narrative.

Dates and publication context

One report carried a timestamp of Apr 28, 2026, 09:12 IST, and described the growth outlook as resilient but exposed to West Asia-related risks. A separate dispatch referenced New Delhi, March 12, and similarly highlighted the combination of 7% growth expectations and higher inflation and CAD forecasts.

Conclusion

Nomura expects India’s FY27 growth to dip in the first half, with GDP growth estimated at 6.3% to 6.7%, before improving to about 7.1% to 7.2% later in the year. At the same time, it has raised its FY27 inflation forecast to 4.5% and its CAD projection to 1.6% of GDP, citing energy and geopolitical risks. The next major signposts will be incoming data on consumption, industrial activity, exports and government spending, alongside developments in energy markets tied to West Asia.