India a bright spot in challenging global economy: UN report

By Deepak Arora

NEW DELHI/ UNITED NATIONS, Jan 8: India remains a bright spot in a challenging global economy, on course to be the fastest growing major economy in 2026, powered by resilient domestic demand and strategic investment, according to the UN report titled "World Economic Situation and Prospects 2026", released on Thursday.

Chris Garroway de Coninck, the UN country economist for India based in the Office of the UN Resident Coordinator, released the report at UN House here.

The report was released at the UN Headquarters in New York by Assistant Secretary-General for Economic and Social Affairs, Navid Hanif, along with Shantanu Mukherjee, who is DESA’s Director of Economic Analysis and Policy Division, and Ingo Pitterle, DESA’s Senior Economist and Officer-in-Charge of the Global Economic Monitoring Branch.

The global economy has shown resilience amid turbulence during the past year, including shifting trade policies – yet growth remains subdued and far below pre-pandemic levels, the UN said in a landmark report.

The report predicts that global economic output will grow by 2.7 per cent this year or slightly below the 2.8 per cent estimated for 2025 and well below the pre-pandemic average of 3.2 per cent.

The report noted that a sharp increase in United States tariffs “created new trade frictions, though the absence of broader escalation helped limit immediate disruptions to international commerce.”

South Asia’s outlook remains robust, with growth projected to ease slightly from 5.9 per cent in 2025 to 5.6 per cent in 2026, before improving to 5.9 per cent in 2027.
In India, growth is forecast to moderate from 7.4 per cent in 2025 to 6.6 per cent in 2026 and 6.7 per cent in 2027 as resilient private consumption and strong public investment largely offset weaker net exports amid higher U.S. tariffs.

Garroway said “India remains the bright spot in a challenging global economy, on course to be the fastest growing major economy in 2026, powered by resilient domestic demand and strategic investment.”

He added that sound policy could turn demographic strengths, digital leadership, and industrial diversification into lasting development.

India’s resilient household consumption, strong public investment, impacts of tax reform, and lower interest rates are expected to underpin economic activity. While exports may face headwinds from higher United States tariffs, key export segments are likely to remain exempt, with strong demand from other major markets expected to partially offset the impact.

South Asia’s broader economic outlook remains robust, supported by private consumption and public investment. Inflation across the region declined sharply in 2025, with rates in most economies at or below central bank targets and long-term averages. Average consumer price inflation is projected to edge up from 8.3 per cent in 2025 to 8.7 per cent in 2026, ranging from 3.2 per cent in Nepal and 4.1 per cent in India to 35.4 per cent in the Islamic Republic of Iran.

The report cautioned that risks to the outlook for East and South Asia remain tilted to the downside. Trade policy uncertainty continues to pose a near-term risk, despite recent United States tariff increases on Asian economies being smaller than initially anticipated and some trade agreements having been reached. A slowdown in major economies, including China, the European Union, and the United States, could further weigh on regional trade, investment flows, and tourism.

High public debt presents another significant vulnerability. Fragile fiscal positions in several economies limit policy space and constrain the ability to provide counter-cyclical support or respond effectively to external shocks, particularly in South Asia.

“A combination of economic, geopolitical and technological tensions is reshaping the global landscape, generating new economic uncertainty and social vulnerabilities,” said United Nations Secretary-General António Guterres. “Many developing economies continue to struggle and, as a result, progress towards the Sustainable Development Goals remains distant for much of the world.”