India's GDP growth seen easing to 6.6% in 2026 before picking up in 2027: UN report

India’s economic growth, estimated at 7.4% in 2025, is forecast to moderate to 6.6% in 2026 before edging up to 6.7% in 2027, according to a United Nations report released on Thursday.

The assessment is part of the World Economic Situation and Prospects 2026, published by UN Trade and Development.

“In India, growth is estimated at 7.4 per cent for 2025 and forecast at 6.6 per cent for 2026 and 6.7 per cent for 2027, supported by resilient consumption and strong public investment, which should largely offset the adverse impact of higher United States tariffs on exports,” the report said.

It added that the recent tax reforms and monetary easing should provide additional near-term support.

The Union government last year brought several changes to the new tax regime as it sought to provide relief to the middle class.

The government also introduced reforms to the goods and services tax (GST) by simplifying the tax structure and reducing rates on essential goods.

The Reserve Bank of India, meanwhile, has cut the repo rate by 125 basis points (bps) in the ongoing monetary policy easing cycle that began in February 2025.

According to the UN report, India recorded strong growth in gross fixed capital formation, led by higher public spending on physical and digital infrastructure, defence, and renewable energy.

The outlook for South Asia remains relatively strong, though growth is projected to ease from 5.9% in 2025 to 5.6% in 2026, before recovering to 5.9% in 2027.

However, trade policy uncertainty and high public debt continue to constrain several economies in the region.

At the global level, economic growth is estimated at 2.8% in 2025 and is forecast to decline slightly to 2.7% in 2026, before edging up to 2.9% in 2027.

This remains well below the pre-pandemic average growth of 3.2% recorded during 2010–2019.

In the United States, growth slowed from 2.8% in 2024 to an estimated 1.9% in 2025, as strong consumer spending and AI-related investment were partly offset by weak residential and commercial construction.

Growth is forecast to rise to 2.0% in 2026 and 2.2% in 2027, supported by expansionary fiscal and monetary policies. Inflation is expected to remain above the 2% target in 2026 but gradually moderate thereafter.

The European Union economy is projected to grow 1.3% in 2026 and 1.6% in 2027, compared with an estimated 1.5% in 2025, with resilient consumer spending remaining the main driver even as higher US tariffs and geopolitical uncertainty weigh on exports.

China’s economy is projected to grow 4.6% in 2026 and 4.5% in 2027, following an estimated 4.9% expansion in 2025.

The report said a temporary easing of trade tensions with the United States has helped stabilise confidence, while policy support is expected to sustain domestic demand. However, downside risks persist from potential renewed trade frictions, weak external demand and continued stress in the property sector.