![\"Middle](\"https:\/\/static.toiimg.com\/thumb\/msid-130367254,imgsize-154366,width-400,height-225,resizemode-4\/ai-generated-image-used-only-for-representational-purpose.jpg\")
<\/div>\n<\/div>\n<\/div>\n<\/section>\n<\/div><\/div>\n<\/div>\nIndia\u2019s growth trajectory is expected to remain steady despite the ongoing Middle East crisis, that has sent ripples across the globe. In its latest report, SBI Research said that the country is navigating oil shocks and the Iran war from a \u201csituation of strength\u201d, projecting GDP growth at 6.8% to 7.1% in FY27.The report noted that India entered the current phase on firm footing. \u201cThe country has entered the global geo-political conflict from a situation of strength this time with FY26 growth at 7.6%, similar to Russia and Ukraine crisis, when India was expanding at more than 9%,\u201d it said. <\/p>\n Watch<\/span><\/p>\n IMF Says India Growing Twice As Fast As World Economy, Signals Strength Amid Global Slowdown<\/div>\n<\/div>\n<\/div>\n Strong domestic fundamentals are also seen as a key buffer. \u201cIndia has a strong Banking sector,\u201d the report stated, while also calling for \u201ca comprehensive package to support Balance of Payments and hence Rupee.\u201d At the same time, it flagged potential risks, noting that \u201cfears of Super El Nino could cloud growth estimates.\u201d Inflation is expected to average 4.5%, with the fiscal deficit projected at 4.5\u20134.6%. The ongoing conflict is exerting pressure across sectors. SBI Research described \u201cmultiple vortexes of headwinds\u201d affecting agriculture, MSMEs, consumption and global supply chains. However, it also pointed to \u201cgreen shoots\u201d that could help India reposition itself within global value chains.Overall, the report maintained that India\u2019s growth story continues to demonstrate resilience, with growth likely to remain within the 6.8% to 7.1% range despite global and regional challenges. For the Reserve Bank of India, it highlighted a \u201cgrowth-inflation paradox\u201d and said there is \u201clittle room for a rate decision at this juncture.\u201d It expects rates to remain unchanged \u201ctill the full impact of the war, as also evolving climate patterns become clear, implying a lower for longer regime to continue.\u201d<\/p>\n Looking at the global picture, the report said oil shocks in the past have often pushed the United States into recession, though the current situation may unfold differently. \u201cUnlike during earlier oil shocks, US households are receiving substantial tax refunds, and the US is energy self-sufficient, in contrast to earlier episodes. Thus, as an oil exporter, the US now keeps higher energy spending at home when prices rise.\u201dAs geopolitical tensions intensify and energy markets are strained, concerns over a potential slowdown in the US economy. While such circumstances have historically resulted wide-ranging repercussions, SBI Research suggested that the present cycle may have only limited, though noticeable, implications for India.The report highlighted many examples, including the 1973 oil embargo, the 1979 Iran crisis, the Gulf War and the 2008 global financial crisis, where sharp increases in crude prices were followed by economic downturns in the US. However, \u201cthis time may be different\u201d the report said due to changes in the US economy.With the US now moving towards energy self-sufficiency and operating as a net energy exporter, higher oil prices may circulate more within the domestic economy rather than creating the same level of external strain seen earlier. It also pointed to support for US households through substantial tax refunds, which could help sustain consumption and cushion or delay the impact of any slowdown.Even so, the report cautioned that risks persist. Ongoing tensions in the Middle East and disruptions to global supply chains continue to add uncertainty, and while the traditional link between oil shocks and US recessions may weaken, it has not disappeared entirely.It also highlighted shifts in global investment patterns, stating that \u201cDubai and Abu Dhabi financial centres are entering a period of uncertainty,\u201d with some global investors and NRIs reassessing their exposure to Dubai. \u201cThis presents a good opportunity for IFSC GIFT City as a stable global financial destination.\u201dAir travel patterns could also shift, with parts of Middle East and UAE airspace becoming riskier. India and China may emerge as alternative transit hubs, though the report cautioned that this \u201cmay require investments in airport infrastructure, connectivity and passenger experience.\u201dOn interest rates, the report said many central banks paused in 2026 after rate cuts in 2025 and are now \u201creassessing the glide path afresh if a promising deal… is brokered for peace in the raging West Asia, duly incorporating the impact of domestic macros, trade headwinds, fiscal constraints and currency perils.\u201d<\/div>\nUS outlook: Oil shocks may test growth, but impact could be different<\/h2>\n<\/p>\n