UNITED NATIONS The United Nations has revised India’s economic growth forecast for 2026 downward to 6.4 per cent from its previous forecast of 6.6 per cent, citing global uncertainty and economic shocks arising from the ongoing West Asia crisis.
According to the report released by the United Nations Department of Economic and Social Affairs on Tuesday, India remains one of the fastest growing major economies.
The report said that the West Asian crisis caused another shock to the global economy, slowing growth, reigniting inflationary pressures, and increasing uncertainty.
India is “not immune” to current global challenges, said Ingo Petrel, chief economist and official in charge of the Global Economic Monitoring Branch of the Economic Analysis and Policy Division of the United Nations Department of Economic and Social Affairs.
“It is a large energy importer and is also exposed to other channels, for example, remittances, which increases some vulnerability. Global financial tightening will also make monetary policy more complex,” he added.
Peterle noted that for all countries the West Asia “shock” has a dual impact on growth – it lowers growth while simultaneously raising inflation, thus restricting policy space. “This will also be the case for India. So, the question remains: How will the central bank as well as the financial authorities respond to this?…”
However, the report noted that India remains one of the fastest growing major economies, with output still expected to grow by 6.4 percent, although a decline from 7.5 percent in 2025 “highlights the drag caused by rising energy import costs and tightening financial conditions.”
“We have seen very strong growth structurally in India, which has been driven by consumer demand and public investment, but also by the strong performance in services exports. These key drivers will remain largely intact, so it is clear that India will continue to be one of the fastest growing economies in the world,” Peterel said in response to a question from PTI.
The report predicts that the country could grow by 6.6 percent in 2027.
Asked about India’s growth outlook, Shantanu Mukherjee, Director of the Economic and Policy Analysis Division of the United Nations Department of Economic and Social Affairs, said that for many export-dependent countries, it is important to keep in mind that when import costs rise, exports can also be affected.
“This is a long-term structural problem that you might start to see when things like shipping costs, logistics costs, industrial petrochemicals… like diesel fuel start to cost more to companies,” he said.
“Having said that, like many other large economies, India has some room to manage these shocks, which is why I think we have been saying all along that a lot depends on whether you can manage these shocks within existing buffers before you run out of buffers, fiscal space. That is critical,” Mukherjee said.
Global GDP growth is now expected to reach 2.5 percent in 2026, 0.2 percentage points lower than the January forecast and well below pre-pandemic norms, the report said.
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