India continues to outpace global economic headwinds, according to the latest Economic Outlook released by the Organisation for Economic Co-operation and Development (OECD) on Tuesday. The OECD forecasts India’s economy to expand by 6.3% in 2025 and 6.4% in 2026.
This robust growth is being driven by strong domestic consumption, the resilience of both the services and manufacturing sectors, and sustained investment in infrastructure. These factors position India as a standout performer amid an environment of international uncertainty.
However, the report also highlighted potential downside risks. External challenges—particularly stemming from rising global trade tensions—could negatively affect India’s export-oriented industries.
In contrast, China’s economic momentum is slowing. The OECD expects China’s growth to taper from 5.0% in 2024 to 4.7% in 2025 and further to 4.3% in 2026.
On a broader scale, the Outlook forecasts a deceleration in global economic activity, with worldwide GDP growth projected to slow from 3.3% in 2024 to 2.9% in both 2025 and 2026.
“The slowdown will likely be most pronounced in the United States, Canada, Mexico, and China,” the report observed, “with more modest slowdowns expected in other regions.”
For the United States, GDP growth is forecasted to drop from 2.8% in 2024 to 1.6% in 2025, and then to 1.5% in 2026.
Inflation, which had eased in many regions, is showing signs of resurfacing. In economies where tariff hikes have increased trade costs, inflationary pressures are expected to mount further. Nevertheless, falling commodity prices may help cushion some of this inflationary impact.
The report projects that annual headline inflation across G20 economies will ease from 6.2% to 3.6% in 2025, and further to 3.2% in 2026.
“The global economy has entered a phase marked by increased uncertainty, transitioning from a period of resilient growth and easing inflation,” said OECD Secretary-General Mathias Cormann in a statement.
Cormann urged policymakers to pursue constructive engagement and cooperation. “Governments must work collaboratively to resolve challenges in the global trade system. Maintaining open markets and upholding the advantages of a rules-based global trade framework is essential—for fostering competition, innovation, productivity, efficiency, and ultimately sustainable economic growth,” he stated.
The report adds that rolling back newly imposed trade barriers could enhance global economic prospects and help reduce inflationary pressures. Moreover, a peaceful resolution to Russia’s war in Ukraine and conflicts in the Middle East could further restore global investor confidence and encourage new investments.
“Central banks must stay alert in this volatile environment, as initial increases in trade costs could lead to broader wage and price pressures,” the report advised.
If inflation expectations remain stable and trade tensions do not escalate, the Outlook suggests that policy rate cuts should continue in countries where inflation is trending downward and overall demand remains soft.
