India to see 6.6% growth in 2026 amid global headwinds: report

Global economic growth is projected to remain subdued in 2026 amid elevated uncertainty, persistent trade tensions, and tight fiscal conditions, the United Nations said on Thursday, warning that structural headwinds continue to weigh on the global outlook.

Global output is forecast to grow by 2.7 per cent in 2026, slightly below the 2.8 per cent estimated for 2025 and well under the pre-pandemic average of 3.2 per cent, according to the World Economic Situation and Prospects 2026 report. While the world economy showed unexpected resilience in 2025, supported by solid consumer spending, easing inflation and robust trade growth, weak investment and limited fiscal space risk locking in a prolonged period of slower growth.

Presenting the report at UN House in New Delhi, Chris Garroway, the UN country economist for India based in the Office of the UN Resident Coordinator, said that amid elevated global uncertainty, India continues to outperform most major economies.

“India remains the bright spot in a challenging global economy, on course to be the fastest growing major economy in 2026, powered by resilient domestic demand and strategic investment,” Garroway said, adding that sound policy could turn demographic strengths, digital leadership, and industrial diversification into lasting development.

India’s growth is projected to moderate from an estimated 7.4 per cent in 2025 to 6.6 per cent in 2026. Resilient household consumption, strong public investment, impacts of tax reform, and lower interest rates are expected to underpin economic activity. While exports may face headwinds from higher United States tariffs, key export segments are likely to remain exempt, with strong demand from other major markets expected to partially offset the impact.

South Asia’s broader economic outlook remains robust, supported by private consumption and public investment. Inflation across the region declined sharply in 2025, with rates in most economies at or below central bank targets and long-term averages. Average consumer price inflation is projected to edge up from 8.3 per cent in 2025 to 8.7 per cent in 2026, ranging from 3.2 per cent in Nepal and 4.1 per cent in India to 35.4 per cent in the Islamic Republic of Iran.

The report cautioned that risks to the outlook for East and South Asia remain tilted to the downside. Trade policy uncertainty continues to pose a near-term risk, despite recent United States tariff increases on Asian economies being smaller than initially anticipated and some trade agreements having been reached. A slowdown in major economies, including China, the European Union, and the United States, could further weigh on regional trade, investment flows, and tourism.

High public debt presents another significant vulnerability. Fragile fiscal positions in several economies limit policy space and constrain the ability to provide counter-cyclical support or respond effectively to external shocks, particularly in South Asia.

“A combination of economic, geopolitical and technological tensions is reshaping the global landscape, generating new economic uncertainty and social vulnerabilities,” said United Nations Secretary-General António Guterres. “Many developing economies continue to struggle and, as a result, progress towards the Sustainable Development Goals remains distant for much of the world.”

Click here to access World Economic Situation and Prospects 2026