India To Remain Fastest Growing Economy, Likely To Grow at 6.7%: World Bank

India is projected to remain the fastest-growing major economy for the next two years, with a growth forecast of 6.7% for FY26, according to the World Bank’s Global Economic Prospects report. While the country’s growth is expected to slow from 8.2% in FY24 to 6.5% in FY25, this deceleration is primarily due to a slowdown in investment and weak manufacturing performance. However, India’s services sector is anticipated to continue expanding, and the agricultural sector has seen a recovery. Private consumption, which remains resilient, will be driven by a strengthening labor market, growing credit, and declining inflation.

The World Bank points to several factors supporting India’s growth, including government initiatives aimed at improving logistics infrastructure and business conditions through tax reforms. Investment growth is expected to stay steady, supported by rising private investments and healthy corporate balance sheets. However, government consumption is likely to remain contained.

Globally, economic growth is projected at 2.7% in 2025 and 2026, the same pace as 2024, with inflation and interest rates gradually declining. Developing economies are expected to maintain steady growth at around 4%. However, the World Bank cautions that the next 25 years will present more challenges for developing economies than the past 25 years due to rising debt, weak investment, and the impacts of climate change. These economies will need new strategies focusing on domestic reforms to boost private investment, deepen trade ties, and promote efficient use of resources.

For South Asia, risks include heightened policy uncertainty, protectionist trade measures, rising commodity prices, and climate-related disasters, all of which could hinder growth prospects.