OECD Projects India as the Fastest Growing Economy for the Next Two Years
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Synopsis
The OECD forecasts that India will maintain its status as the fastest-growing major economy, projecting a GDP growth of 6.4% for 2025 and 6.6% for 2026. This aligns with the RBI's growth outlook amid global economic resilience tempered by policy uncertainty.
Key Takeaways
- India's GDP growth is projected at 6.4% for 2025 and 6.6% for 2026.
- OECD estimates China's growth at 4.8% and 4.4% for the same years.
- RBI forecasts India's growth at 6.7% for FY26.
- Global GDP growth is expected to decline.
- Policy uncertainty and trade restrictions pose risks to economic growth.
New Delhi, March 17 (NationPress) The Organisation for Economic Co-operation and Development (OECD) anticipates that India will continue to be the fastest-growing major economy for the upcoming two years, with the country's GDP growth rate forecasted at 6.4% for the financial year 2025 and 6.6% for 2026.
The OECD report estimates China's growth rate to be 4.8% in 2025 and 4.4% in 2026.
These projections align closely with the RBI's forecast for India's growth. In its outlook published in February, the central bank's monetary policy committee maintained the growth estimate at 6.7% for FY26. The Economic Survey has set growth expectations between 6.3% and 6.8% for FY26.
OECD Secretary-General Mathias Cormann stated, "The global economy has demonstrated notable resilience, with steady growth and declining inflation. Nevertheless, signs of weakness have surfaced, caused by increased policy uncertainty."
He added, "The rise in trade restrictions will lead to higher costs for both production and consumption. It is crucial to maintain a well-functioning, rules-based international trading system and to keep markets accessible."
The OECD report forecasts that global GDP growth will decline from 3.2% in 2024 to 3.1% in 2025 and 3.0% in 2026, with escalating trade barriers in several G20 nations and rising policy uncertainty impacting investments and consumer spending. The annual real GDP growth in the United States is projected to decelerate from its robust recent pace to 2.2% in 2025 and 1.6% in 2026.
Growth in the Euro area is estimated to be 1.0% in 2025 and 1.2% in 2026, as heightened uncertainty suppresses expansion.
The report indicates that the global economy remained robust in 2024, growing at a solid annualised rate of 3.2% through the latter half of the year. However, recent indicators suggest a softening of global growth outlooks. Business and consumer sentiment has weakened in various nations, and inflationary pressures persist in many economies. Concurrently, policy uncertainty remains elevated, and significant risks are present.
Further fragmentation of the global economy is a major concern. Unexpectedly high inflation could lead to tighter monetary policy and potentially cause disruptive shifts in financial markets. Conversely, agreements that reduce tariffs from current levels could lead to stronger growth, the report stated.
