World Bank flags oil, El Niño and global market risks to growth

The World Bank expects South Asia to expand 6.9% by 2026, supported by stronger consumer demand, with India projected to grow 7.1% and remain the region's main engine. The outlook is broadly positive, but it is conditional on inflation and external pressures remaining manageable. Higher oil and energy prices could raise costs, while El Niño and instability in global markets may add pressure through food prices, financial conditions and weaker confidence. The material does not provide earlier forecasts, inflation readings or estimates of the potential impact from these risks.

For Indian markets, resilient consumption and 7.1% growth could support earnings expectations for consumer durables, discretionary goods, retail and financial services. However, the consumer durables sector has fallen 5.2% over one month and 9.9% over three months, suggesting investors may already be weighing demand, valuation or cost concerns. An oil shock could raise transport and input expenses, while El Niño may lift food inflation, constrain household spending and complicate monetary policy. Stronger consumption data, easing inflation and stable energy prices would confirm the positive reading. Renewed price pressures or tighter global financial conditions would weaken it.