UN outlook: India’s economy to grow 6.4% amid global headwinds
According to United Nations World Economic Situation and Prospects Report, India remains one of the fastest growing major economies
By R Anil Kumar
UN. India’s economy is projected to grow at 6.4 per cent in 2026 and 6.6 per cent in 2027, according to a United Nations report, indicating the country’s continued position as a key driver of growth in the Asia-Pacific region.
The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), in its latest Economic and Social Survey of Asia and the Pacific 2026, said the region’s economies expanded by 5.4 per cent in 2025, up from 5.2 per cent in 2024, largely supported by strong performance in India.
India’s growth rose to 7.4 per cent in 2025, “supported by robust consumption, especially from the rural economy along with goods and services tax rate cuts, and export front loading ahead of the United States’ tariffs,” the report noted.
Growth moderates amid global headwinds:
The report flagged that economic activity in India slowed in the latter half of 2025, mainly due to a sharp 25 per cent fall in exports to the United States after Washington imposed 50 per cent tariffs in August last year.
Despite this, the services sector remained a major growth engine.
Inflation is expected to stay relatively stable, projected at 4.4 per cent in 2026 and 4.3 per cent in 2027, indicating a controlled price environment alongside steady expansion.
FDI, remittances and external pressures:
ESCAP highlighted that foreign direct investment (FDI) inflows into developing Asia-Pacific economies declined by 2 per cent in 2025 amid trade tensions and geopolitical uncertainty, even as global FDI flows rose.
India, however, remained among the top destinations for greenfield investments, attracting about $50 billion in the first three quarters of the year.
The report also pointed to the importance of remittances in sustaining household consumption.
India, the world’s largest remittance recipient with $137 billion in 2024, could face challenges after the United States imposed a 1 per cent tax on such transfers from January 2026.
Green transition and job creation:
ESCAP emphasised the role of clean energy transition in shaping future growth. It cited estimates showing 16.6 million green jobs globally, with India accounting for about 1.3 million.
Policies like India’s production-linked incentive scheme were highlighted as key tools to boost domestic manufacturing in sectors such as solar energy, batteries and green hydrogen.
“Governments can leverage the energy transition… to foster new domestic industries,” the report said, stressing the importance of targeted industrial policies.
The UN outlook aligns broadly with recent projections by the International Monetary Fund, which also expects India to remain the world’s fastest-growing major economy. However, global risks remain, particularly from ongoing geopolitical tensions and trade disruptions.
Despite these uncertainties, the UN report suggests India’s economic fundamentals remain strong, supported by domestic demand, policy support and its growing role in global supply chains.
