Morgan Stanley Projects India’s GDP Growth at 6.8% in 2026 Despite Global Energy Concerns

New Delhi: Global brokerage firm Morgan Stanley has projected India’s GDP growth at a healthy 6.8 per cent in 2026, driven by strong domestic demand, government-led capital expenditure and improving industrial activity across Asia.

In its latest outlook report, the brokerage said India is expected to benefit from Asia’s emerging industrial and capital expenditure super-cycle, even amid ongoing global economic and geopolitical uncertainties.

According to the report, Asia is entering what Morgan Stanley described as its “most powerful industrial super-cycle since the mid-2000s,” fuelled by rising investments in artificial intelligence (AI) infrastructure, energy transition projects, defence spending and industrial expansion.

The report noted that India is well-positioned to gain from this regional industrial growth cycle, supported by increasing domestic capital expenditure and relatively supportive fiscal and monetary policies.

It further stated that recent high-frequency economic indicators suggest India’s domestic demand recovery, which began in the second half of 2025, remains largely intact.

Morgan Stanley identified urban consumption and government infrastructure spending as the major growth drivers for the Indian economy in 2026. It also said measures aimed at stabilising fuel prices are likely to support private consumption growth.

However, the brokerage cautioned that rural demand could face temporary pressure due to weather-related disruptions and fertiliser supply challenges.

The report highlighted that government spending is expected to remain focused on infrastructure and defence sectors. It also pointed out that India has increased LPG production by 40 per cent as part of efforts to strengthen energy security and manage fuel supply disruptions.

According to Morgan Stanley, Asia’s gross fixed investment is projected to rise from 11 trillion dollars currently to 16 trillion dollars by 2030, reflecting a 7 per cent compound annual growth rate over the next five years.

The report added that investments in AI infrastructure, energy transition and defence are expected to grow at a 16 per cent CAGR between 2026 and 2030, which could positively impact exports, employment generation and consumer demand across Asia.

At the same time, the brokerage warned that geopolitical tensions and rising energy prices remain key near-term risks for the regional economy.

With inputs from IANS