Page 11 - Policy Economic Report- June'26

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Growth Forecast - Emerging Market and Developing Economies

Emerging Market and Developing Economies (EMDEs) are expected to continue outperforming advanced
economies despite a moderation in growth. Domestic demand, public investment, and structural reforms
are expected to support economic activity, although higher commodity prices, tighter global financial
conditions, geopolitical tensions, and weaker external demand continue to pose downside risks. Growth
prospects vary considerably across regions, reflecting differences in energy exposure, fiscal capacity, and
domestic policy responses.

• Emerging Market and Developing Economies (Overall): Growth is projected to moderate from 4.0
% in 2025 to 3.6 % in 2026, reflecting weaker global demand, elevated energy prices, tighter
financial conditions, and persistent geopolitical uncertainty. Growth is expected to recover to 4.2
% during 2027–28 as global trade and investment gradually strengthen.

• China: Growth is projected to moderate to 4.2 % in 2026, reflecting subdued consumer
confidence, continued adjustment in the property sector, and weaker external demand. Policy
support, together with continued expansion in advanced manufacturing and technology sectors,
is expected to sustain economic activity, with growth averaging 4.3 % during 2027–28.

• India: S&P Global projects India's real GDP growth will slow to 6.6% for the fiscal year ending
March 2027. This aligns with the Reserve Bank of India’s (RBI) current estimates. India's slowdown
is heavily driven by supply-side shocks. Being dependent on imports for 88% of its crude oil needs,
geopolitical tensions in the Middle East have severely escalated India's import bills. Concurrently,
El Niño has weakened the monsoon, creating an early rainfall deficit that risks hurting agricultural
production. India is expected to stage a healthy recovery in FY28, with GDP growth bouncing back
to 7.2%.

• Commodity-exporting EMDEs: Growth is projected at 2.4 % in 2026, reflecting disruptions to
energy production and exports in parts of the Middle East, together with weaker global demand.
Growth is expected to recover to 3.4 % during 2027–28 as energy markets stabilize,
reconstruction efforts progress, and export conditions improve.

• Commodity-importing EMDEs (excluding China): Growth is projected to moderate to 4.1 % in
2026, reflecting higher energy import costs and tighter financial conditions that weigh on
investment and consumption. Growth is expected to strengthen to 4.8 % during 2027–28,
supported by easing inflation, improving investor confidence, and recovering global trade.

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