“Resilient Activity Keeps India Among Fastest-Growing Economies,” Says World Bank

New Delhi: India is expected to remain one of the world’s fastest-growing major economies, with economic growth projected at 7.2 percent in FY2025–26, driven largely by strong domestic demand and resilient economic activity. The outlook comes even as global trade tensions and policy uncertainties continue to weigh on the international economy.

According to the latest Global Economic Prospects assessment, India’s performance has played a central role in supporting growth across South Asia. Regional growth strengthened to 7.1 percent in 2025, primarily due to sustained momentum in the Indian economy, which helped offset the impact of global headwinds such as trade frictions and uncertain policy environments.

India’s expansion is being underpinned by robust private consumption, supported by earlier tax reforms and rising real household incomes, particularly in rural areas. Strong demand within the country has helped cushion the impact of external pressures, including higher tariffs on select exports to the United States. Despite these trade-related challenges, India’s growth forecast remains unchanged from earlier estimates, as stronger domestic momentum is expected to offset potential export-related losses.

The growth rate is projected to ease modestly to 6.5 percent in FY2026–27, assuming elevated US import tariffs persist. However, growth is expected to pick up slightly to 6.6 percent in FY2027–28, supported by continued strength in services, a gradual recovery in exports, and improved investment flows.

India continues to serve as the primary growth engine for South Asia. Excluding India, growth in the region is forecast to rise to 5.0 percent in 2026 and 5.6 percent in 2027. Overall regional growth is expected to moderate to 6.2 percent in 2026 before rebounding thereafter.

At the global level, easing financial conditions and fiscal expansion in major economies are helping soften the effects of weaker trade and demand. However, the report cautions that the 2020s are shaping up to be the slowest decade for global growth since the 1960s, with rising public and private debt posing additional risks.

For developing economies like India, the emphasis going forward will be on boosting productivity, creating jobs, and sustaining long-term growth, as per capita income gains are expected to remain below historical averages.