India’s economy is predicted to grow by 7.6% in FY2025/26, followed by a slight moderation to 6.6% the following year, according to the World Bank’s latest report. This growth is expected to anchor South Asia, which is projected to slow down to 6.3% in 2026. The report highlights India as the primary driver of regional expansion, supported by strong domestic demand and trade reforms.
The World Bank anticipates a decline in South Asia’s overall growth from 7% in 2025 due to global energy disruptions and geopolitical uncertainties. However, growth is expected to rebound to 6.9% in 2027. The report emphasizes that India’s performance is crucial for the region’s momentum, with robust consumption and resilient services exports driving its growth.
India’s economic outlook is positive, with accelerated growth fueled by strong domestic demand and policy reforms. Despite facing challenges from global trade volatility, India’s domestic demand remains robust. However, external risks such as rising oil prices due to the Middle East conflict could impact India’s growth by increasing inflation and tightening financial conditions.
The World Bank underscores the importance of critical policy reforms for sustaining growth in South Asia. India’s economic trajectory is significant for the region’s overall performance, with the report indicating that excluding India, South Asia’s growth is expected to align more closely with other emerging markets. Industrial policies in South Asia, including India, have shown mixed results, with import-restricting policies leading to declines in imports.
