New Delhi, Sep 23 (NationPress) The Organization for Economic Cooperation and Development (OECD) has revised its forecast for India's GDP growth, increasing it by 40 basis points to 6.7 percent for the year 2025. This adjustment comes from an earlier estimate of 6.3 percent made in June, primarily fueled by strong domestic demand and significant GST reforms.

The OECD's recent 'World Economic Outlook' report highlighted that while higher tariff rates may impact the export sector, overall economic activity is expected to be bolstered by easing monetary and fiscal policies. This includes the reform of the Goods and Services Tax (GST), with growth projections set at 6.7 percent for 2025 and 6.2 percent for 2026.

Moreover, the report noted a substantial decline in food price inflation in India, attributed to strong domestic supply and export restrictions.

Globally, growth has proven to be more resilient than anticipated in the first half of 2025, particularly in emerging markets.

The OECD has raised its growth forecast for the global economy to 3.2 percent for this year, while maintaining its projection for 2026 at 2.9 percent. They cautioned that uncertainties in global trade, fueled by U.S. tariffs, could negatively affect investment and trade in the latter half of 2025.

According to the OECD, the preemptive increase in goods production and trade ahead of the implementation of higher U.S. tariffs has served as a critical support mechanism, with industrial production growth in the first half of the year surpassing the average pace observed in 2024 across most G20 countries.

Since May, U.S. tariffs on imports from nearly all countries have ascended, reaching an estimated effective rate of 19.5 percent by the end of August, marking the highest level since the mid-1930s.

The OECD cautioned that while the comprehensive effects of these tariff increases are still emerging, early indicators are evident in consumer behaviors, labor markets, and pricing trends. Labor markets are showing signs of softness, with rising unemployment rates and fewer job opportunities in certain economies, while disinflation has stalled as food prices and services inflation remain persistent.

Looking forward, significant downside risks persist, including potential further tariff hikes, heightened fiscal concerns, and renewed inflation pressures that could hinder growth. Additionally, financial market fluctuations, including volatile cryptocurrency assets, could pose further stability challenges. Conversely, easing trade restrictions or rapid advancements in AI technology could yield stronger outcomes.