India Retains Title as Fastest-Growing Major Economy; World Bank Projects 6.3% Growth for FY26

New Delhi/Washington, June 11, 2025 — India is set to maintain its position as the world’s fastest-growing major economy, with the World Bank projecting a 6.3% growth rate for the financial year 2025-26, according to the latest Global Economic Prospects report released on Tuesday. This forecast, though slightly lower than the January estimate of 6.7%, underscores India’s resilience amid a challenging global economic environment marked by rising trade barriers and subdued external demand.

India’s Growth Outlook

The World Bank’s report highlights that, despite a moderation in growth due to weaker exports and a slowdown in investment, India’s economy continues to be driven by robust domestic demand and a strong services sector. The downgrade of 0.4 percentage points from the earlier projection is attributed mainly to weaker activity among key trading partners and an increasingly restrictive global trade environment.

Looking ahead, the World Bank expects India’s growth to rebound to an average of 6.6% in FY27 and FY28, supported by a revival in services and a likely pickup in exports as global conditions improve. The Reserve Bank of India (RBI) has also retained its growth forecast at 6.5% for FY26, in line with these projections.

Global Economic Context

Globally, the economic outlook remains subdued. The World Bank has revised its global growth forecast downward to 2.3% for 2025, the slowest pace since 2008 outside of recession years. Nearly 70% of all economies have seen their growth projections cut, with advanced economies expected to grow by just 1.2% in 2025.

Indermit Gill, Chief Economist and Senior Vice President for Development Economics at the World Bank, noted that developing economies outside Asia are seeing growth slow to less than 4% in the 2020s, compared to 6% in the 2000s and 5% in the 2010s. Trade growth and investment have also decelerated, while global debt has reached record highs.

South Asia and Neighbours

Within South Asia, India’s growth remains unmatched. The World Bank forecasts China’s growth at 4.5% in 2025, while other regional economies such as Bangladesh and Pakistan are expected to grow at 4.9% and 3.1% respectively in FY.

Policy Recommendations

The World Bank advises developing economies to focus on broadening trade partnerships, liberalising trade, and mobilising domestic revenues to support inclusive growth. Policymakers are urged to prioritise spending for vulnerable populations and strengthen fiscal frameworks to manage rising development needs.

Inflation and Fiscal Outlook

Inflation in India is projected to remain contained, assuming normal seasonal conditions, and fiscal consolidation is expected to continue, supported by growing tax revenues and controlled government spending.

Summary:
Despite global economic headwinds and a downward revision in growth estimates, India is projected to remain the fastest-growing major economy in FY26, with a 6.3% growth rate. The World Bank’s outlook reflects confidence in India’s domestic demand and services sector, even as global trade and investment slow.