India’s economy is expected to continue as one of the fastest-growing major economies globally, with a projected growth rate of 7.2% in the fiscal year 2025-26, according to the World Bank. The growth is supported by strong domestic demand despite increasing global trade tensions. The World Bank’s latest Global Economic Prospects report highlighted that India’s resilience has contributed to the overall growth in South Asia in 2025, countering the effects of heightened policy uncertainty and global trade frictions.
The report emphasized that South Asia’s growth strengthened to 7.1% in 2025, primarily due to resilient economic activity in India. The World Bank clarified that Pakistan and Afghanistan are not included in South Asia, with their economies falling under the Middle East and North Africa division. India’s growth is mainly attributed to robust domestic demand, including strong private consumption, driven by earlier tax reforms and improvements in real household earnings in rural areas.
The World Bank forecasts a slight slowdown in India’s growth to 6.5% in FY2026-27, assuming continued higher US import tariffs, before a slight increase to 6.6% in FY2027-28. This projection is based on strong services activity, a recovery in exports, and enhanced investment flows. Despite facing higher tariffs on specific exports to the United States, India’s growth outlook remains unchanged due to the stronger momentum in domestic demand compared to previous expectations.
India continues to be the primary growth engine in South Asia, with the region’s growth expected to strengthen to 5.0% in 2026 and 5.6% in 2027, excluding India. Globally, the World Bank noted that easing financial conditions and fiscal expansion in major economies are mitigating the impact of softer trade and demand. However, it cautioned that the 2020s could be the weakest decade for global growth since the 1960s.
The World Bank’s Chief Economist and Senior Vice President for Development Economics, Indermit Gill, highlighted that the global economy is growing at a slower pace compared to the 1990s, despite carrying high levels of public and private debt. Gill emphasized the necessity of reforms to sustain long-term growth. The report stressed the importance of enhancing productivity and job creation for developing economies like India, projecting per capita income growth at 3% in 2026, which is below long-term averages, limiting convergence with advanced economies.
