Morgan Stanley has revised its growth forecast for India’s fiscal year FY27 to 6.7 per cent, up from 6.2 per cent forecast in April despite the continuous West Asia conflict.It was predicted in April that the average price of crude oil would be USD 95 per barrel (bbl) in FY27, with the availability of gas serving as an additional barrier. This projection for crude oil has been reduced to USD 87.5 per barrel.Morgan Stanley stated, “In our base case, we expect global oil prices to peak in quarter ending June 2026 (QE Jun-26) and average $87.5/bbl in FY27. We forecast GDP growth of 6.7 per cent YoY in FY27 and 7 per cent in FY28, with the energy shock most pronounced in QE Jun-26, when growth troughs at 6.5 per cent YoY amid elevated commodity prices and lingering supply chain frictions.””Thereafter, as supply-side constraints ease and commodity prices moderate, we expect a gradual normalisation in activity, with growth converging to trend by March 2027,” wrote Upasana Chachra, Chief India Economist at Morgan Stanley.At the same time, Morgan Stanley has issued a warning that continuously high oil prices may have non-linear and increasingly substantial impacts on GDP, as the burden on people and companies increases.According to analysts, the duration of the continuing West Asia crisis and developments related to the India-US trade agreement will determine how disparate external demand is likely to continue.Further, it expects that in a scenario of continued tension, the first-round trade impact will emerge as sequential deterioration in exports, which is fuelled by weaker global growth and trade and exacerbated by higher freight and insurance costs.“In our base case, global growth moderates to 3.2 per cent YoY in 2026 from 3.5 per cent in 2025, with US growth at 2.2 per cent and Europe at 0.6 per cent, both below prior estimates. Slower growth among major trading partners will weigh on external demand. We expect the impact to be more pronounced for goods exports, while services exports should continue to outperform and provide a partial offset,” the analysts noted.