Context:
The Organisation for Economic Co-operation and Development (OECD) has revised downwards India’s economic growth forecast for FY26 to 6.4% from 6.9% projected in its December outlook, amid rising global uncertainty.
Key Updates
- FY25: India’s GDP growth pegged at 6.3% (vs. NSO estimate of 6.5%).
- FY26: Revised downward to 6.4% (from 6.9% projected in December 2024).
- FY27: Forecast also lowered to 6.6% (from 6.8%).
Global Comparison
- United States
- Growth expected to slow to 2.2% in 2025 and 1.6% in 2026.
- China
- Growth forecast at 4.8% in 2025 and 4.4% in 2026.
- Indonesia
- Expected to grow by 4.9% in 2025 and 5% in 2026.
Key Insights from OECD Report
- India’s slowdown will be mild compared to other major economies.
- Export growth support is anticipated for India and Indonesia, as trade shifts from countries facing higher tariffs.
- India’s economic performance in Q4 2024 remained strong with 6.2% GDP growth in the October-December quarter.
- The global economy is facing rising policy uncertainty and trade restrictions, but India remains resilient.
Inflation Projections for India
- FY26: Raised to 4.5% (from 4.8% earlier).
- FY27: Increased slightly to 4.1% (from 4%).
Global Economic Outlook
- Global growth projections lowered:
- 2025: from 3.3% to 3.1%.
- 2026: from 3.1% to 3%.
- OECD Secretary-General Mathias Cormann emphasized the need for an open, rules-based international trading system to curb rising costs and protect economic stability.
Source: TET
