BMI Warns Middle East Conflict May Offset India’s Trade Deal Growth Gains

BMI Research maintains India's FY2026-27 GDP growth forecast at 7%, citing favorable policy uncertainty but warning that the escalating Middle East conflict may dampen investment sentiment. The ongoing Iran-Israel tensions and threats to the Strait of Hormuz, a key oil transit route, could raise energy costs and reduce GDP by up to 0.5 percentage points. While new trade deals with the US and EU are expected to support growth, BMI notes that geopolitical risks may offset these benefits and is assessing their full impact.