New Delhi, May 13 (IANS) Leading global brokerage Morgan Stanley has projected India’s GDP growth to be healthy at 6.8 per cent for 2026, supported by strong domestic demand, government-led capital expenditure and improving industrial activity across Asia.

Moreover, the brokerage in its latest outlook noted that the nation is likely to benefit from Asia’s emerging industrial and capital expenditure super-cycle, with domestic demand momentum remaining resilient despite global macroeconomic and geopolitical uncertainties.

It further said that Asia is entering its ‘most powerful industrial super-cycle since the mid-2000s’, driven by rising investments in artificial intelligence (AI) infrastructure, energy transition, defence spending and broader industrial capacity expansion.

India would benefit from the regional industrial cycle pickup alongside a domestic capex boost supported by relatively easy fiscal and monetary policies, according to the brokerage.

“Incoming high-frequency indicators suggest that the domestic demand recovery since 2H25 remains largely intact,” the report noted.

The brokerage said urban consumption and government capital expenditure are likely to remain key growth drivers for India during 2026.

It further stated that measures to stabilise fuel prices are expected to support private consumption growth, even as rural demand may face temporary pressures from weather-related disruptions and fertiliser supply challenges.

According to the report, government spending is likely to remain focused on infrastructure and defence sectors.

In addition, India has increased LPG production by 40 per cent as part of broader regional efforts to manage fuel supply disruptions and strengthen energy security.

Additionally, the brokerage projected Asia’s gross fixed investment to rise to $16 trillion by 2030 from $11 trillion currently, 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 during 2026-2030, creating positive spillovers for exports, employment generation and consumption growth across Asia.

The report flagged that geopolitical tensions remain a near-term risk due to higher energy prices.

–IANS

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