Washington/New Delhi, June 12:
India will continue to be the world’s fastest-growing major economy despite mounting global uncertainties and the economic fallout from the ongoing conflict in the Middle East, the World Bank said on Thursday while upgrading the country’s growth outlook for the coming years.
In its latest Global Economic Prospects report, the World Bank revised India’s growth forecast for 2026 upward to 6.6 per cent from its earlier estimate of 6.5 per cent made in January. The institution also significantly raised its 2027 projection to 7.2 per cent from 6.6 per cent, citing stronger-than-expected domestic demand and the resilience of the Indian economy.
“India remains the fastest-growing large economy in the world,” World Bank Deputy Chief Economist Ayhan Kose said during a media briefing on the report.
Responding to questions on India’s economic outlook and the impact of the Gulf crisis, Kose said the upward revision reflected the country’s robust domestic demand, which has so far offset the adverse effects arising from the conflict in the Middle East.
“The stronger-than-expected growth momentum in domestic demand has more than compensated for the impact of the regional conflict,” he said.
The World Bank noted that India’s economic fundamentals remain strong despite a challenging global environment marked by geopolitical tensions, rising energy prices and slowing growth across many advanced and developing economies.
“All in all, India has put the necessary policy measures in place,” Kose observed. “When we look at the big picture for India, there is still incredible dynamism.”
The report projects South Asia to remain the fastest-growing region in the world in 2026, although regional growth is expected to moderate to 6.3 per cent from 7 per cent in 2025 due to higher energy costs and spillover effects from the Middle East conflict.
India is expected to remain the primary driver of regional growth, with South Asia’s economy projected to rebound to 6.9 per cent in 2027. The World Bank forecasts India’s growth to reach 7 per cent in 2028.
While upgrading India’s outlook, the World Bank lowered growth projections for much of the global economy. The institution expects global growth to slow to 2.5 per cent in 2026 from 2.9 per cent in 2025, making it the weakest pace since the Covid-19 pandemic.
According to the report, higher oil prices, inflationary pressures and tighter global financial conditions are expected to weigh on economic activity worldwide. Developing economies are projected to grow by only 3.6 per cent in 2026, the slowest rate since the pandemic recovery began.
Despite these challenges, India remains one of the few major economies to receive an upgraded forecast. The World Bank attributed the positive outlook to a rebound in domestic consumption, sustained investment activity and improving export performance.
“The stronger-than-expected growth, driven by a rebound in domestic demand and exports, has led to the upward revision,” Kose said.
The report also cautioned that rising energy and fertiliser prices triggered by the Gulf conflict could pose challenges for several emerging economies, particularly those heavily dependent on imports. However, India’s strong economic momentum and policy framework are expected to help the country navigate these headwinds and maintain its position as the world’s fastest-growing major economy.
