Undeterred by US tariff war, trade upheavals, India to keep record as fastest growing major economy at 6.6pc: UN

A latest report has projected India to be again the fastest growing major economy this year at 6.6 per cent, demonstrating a resilience undeterred by the upheavals in trade and the US tariffs. 

The UN’s flagship economic report attributed some of its performance to “recent tax reforms and monetary easing”.

India’s “resilient private consumption and strong public investment”, the report said, “should largely offset the drag from higher United States tariffs on exports”.

US President Donald Trump hit India with total tariffs of 50 per cent, but despite that, India has managed to keep its rank in the growth tally.

The World Economic Situation and Prospects 2026 (WESP) report said that India’s growth last year was estimated at 7.4 per cent, before moderating this year and picking up again next year to 6.7 per cent.

In contrast, the report forecast the global economy to grow by 2.7 per cent this year, slightly below the 2.8 per cent estimated for last year, and pick up to 2.9 per cent next year.

It would still be well below the pre-pandemic average of 3.2 per cent, the report said.

The projection for China is a 4.6 per cent growth this year, moderating to 4.5 per cent next year. The estimate for last year was 4.9 per cent.

The US is projected to show the best growth rate among developing countries, increasing marginally from the estimated 1.9 per cent last year to 2 per cent this year and 2.2 next.

The European Union grew by an estimated 1.5 per cent last year, with projected growths of 1.3 per cent this year and 1.6 per cent, the next.

Overall, the world economy appears to have navigated the perils of the trade war better than expected.

The report said, “During 2025, unexpected resilience to sharp increases in US tariffs, supported by solid consumer spending and easing inflation, helped sustain growth”.

A partial easing of trade tensions also helped limit disruptions to international commerce, it said.

“However, underlying weaknesses persist”, it warned.

“Subdued investment and limited fiscal space are weighing on economic activity, raising the prospect that the world economy could settle into a persistently slower growth path than in the pre-pandemic era”, it said.

Moreover, the impact of higher tariffs is expected to become more clear this year, it added.

Introducing the report, Secretary-General António Guterres said, “A combination of economic, geopolitical and technological tensions is reshaping the global landscape, generating new economic uncertainty and social vulnerabilities”.

The report said that the economic outlook in South Asia remains “relatively strong” at 5.6 per cent this year and increasing 5.9 per cent next year recovering to the 5.9 per cent level estimated for last year.

The report warned, though, that “trade policy uncertainty continues to weigh on economic prospects, while high public debt in several countries limits fiscal space and heightens vulnerability to shocks”.

These are this year’s growth projections for other South Asian countries:

Bangladesh, 5.1 per cent; Bhutan, 6 per cent; Maldives 4 per cent; Sri Lanka, 4.3 per cent, and Pakistan 3.6 per cent.

Picture Courtesy: IANS