New York: India’s economy is expected to grow at 6.4 per cent in 2026 and 6.6 per cent in 2027, according to a latest report by the United Nations, highlighting the country’s continued resilience despite global uncertainties.
The projections were shared in the Economic and Social Survey of Asia and the Pacific 2026 by the United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
Strong 2025 performance driven by consumption
India recorded a growth rate of 7.4 per cent in 2025, supported largely by robust domestic consumption, particularly from rural areas. Policy measures such as Goods and Services Tax (GST) rate cuts and export frontloading ahead of US tariff hikes also contributed to the growth momentum.
The report noted that the services sector continued to play a crucial role in driving economic activity across the country.
Export slowdown impacts second-half growth
Despite strong annual performance, economic activity moderated in the latter half of 2025. This slowdown was attributed to a sharp 25 per cent decline in exports to the United States following the imposition of 50 per cent tariffs in August 2025.
The report indicated that external trade pressures and global uncertainties remain key risks for India’s growth outlook.
Inflation remains under control
India’s inflation is projected at 4.4 per cent in 2026 and 4.3 per cent in 2027, suggesting relatively stable price levels compared to many global economies.
Controlled inflation, along with steady growth, positions India among the faster-growing major economies in the Asia-Pacific region.
FDI trends show mixed signals
The report highlighted a decline in foreign direct investment (FDI) inflows across developing Asia-Pacific economies due to trade tensions and geopolitical challenges.
However, India remained one of the top destinations for greenfield investments, attracting around $50 billion in announced investments during the first three quarters, alongside countries such as Australia and South Korea.
Remittances provide economic cushion
India continues to be the world’s largest recipient of remittances, receiving approximately $137 billion in 2024. These funds play a critical role in supporting household consumption, particularly for essential expenses like healthcare.
However, the report warned that a 1 per cent tax imposed by the United States on remittances since January 2026 could pose challenges for inflows.
Growth potential in green economy
The report also pointed to opportunities in the renewable energy sector. As per estimates by the International Renewable Energy Agency, India accounts for around 1.3 million green jobs out of the global total of 16.6 million.
Government initiatives such as the Production Linked Incentive (PLI) scheme are expected to boost domestic manufacturing in sectors like solar energy, batteries, and green hydrogen, while reducing import dependence.
Conclusion
The UN report underscores India’s strong growth trajectory, driven by domestic demand and policy support, while also highlighting challenges from global trade tensions. With opportunities in green energy and sustained consumption, India is expected to remain a key growth engine in the global economy.