Washington: India will remain the world’s fastest-growing major economy despite the economic shock from the conflict in the Middle East, with the World Bank on Thursday raised its growth forecast for the country even as it cut projections for much of the global economy.
In its latest Global Economic Prospects report, the World Bank upgraded India’s growth forecast for 2026 to 6.6 per cent from its January estimate of 6.5 per cent and raised its 2027 projection to 7.2 per cent from 6.6 per cent, citing stronger-than-expected domestic demand and economic resilience.
“India remains the fastest growing large economy in the world,” World Bank Deputy Chief Economist Ayhan Kose said during a media briefing on the Bank’s latest Global Economic Prospects report.
Responding to a question from IANS on India’s economic performance and the impact of the Gulf crisis, Kose said the upgraded forecast reflected “stronger than expected growth momentum in domestic demand, which so far, more than offsets the adverse impact of the conflict in the Middle East.”
The World Bank’s latest report projects South Asia to remain the fastest-growing region in the world in 2026, although regional growth is expected to slow to 6.3 per cent from 7 per cent in 2025 because of higher energy prices and broader fallout from the conflict.
Kose said India’s economic fundamentals continued to provide support despite the uncertain global environment.
“All in all, India has put the necessary policy measures in place,” he said. “When we look at the big picture for India, there is still incredible dynamism.”
The World Bank on Thursday warned that the conflict in the Middle East is expected to slow global growth to 2.5 per cent in 2026 from 2.9 per cent in 2025, marking the weakest pace since the onset of the Covid-19 pandemic. Higher oil prices, rising inflation and tighter financial conditions are expected to weigh on activity across much of the world.
Even so, India was one of the few major economies to receive an upgrade.
Kose said the stronger outlook was being driven by a rebound in domestic demand and exports.
“The stronger-than-expected growth, driven by a rebound in domestic demand and exports,” had led to the upward revision, he said.
The report said South Asia would remain the strongest-performing region globally, helped largely by India’s continued expansion. Regional growth is projected to recover to 6.9 per cent in 2027 after the slowdown this year. India is forecast to grow 7 per cent in 2028.
India’s resilience comes at a time when the World Bank expects growth in developing economies to fall to a post-pandemic low of 3.6 per cent in 2026. The report warns that higher energy and fertiliser prices triggered by the Gulf conflict could create challenges for many emerging economies, particularly energy importers.
(IANS)
