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48m ago

World Bank Lifts India’s FY26 Growth Outlook to 6.5%, Flags U.S. Tariff Drag on 2026–27

The lender sees India retaining the fastest‑growing major‑economy mantle, with resilient consumption buttressed by a rural rebound under GST simplification.

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Overview

  • India’s FY26 GDP forecast rises to 6.5% from 6.3%, while FY27 is trimmed to 6.3% on the World Bank’s view that higher‑than‑expected U.S. tariffs will weigh on exports.
  • South Asia’s growth is projected at 6.6% in 2025 before easing to 5.8% in 2026 as the tariff shock feeds through to regional trade and output.
  • The U.S. has levied a 50% tariff on most Indian goods, an action reported to affect roughly $50 billion of exports and to hit labour‑intensive sectors such as textiles, gems and jewellery, and shrimp.
  • The World Bank says India remains the fastest‑growing major economy, supported by strong private consumption, improved agricultural output, rising rural wages, and GST reforms that reduce brackets and simplify compliance.
  • The report highlights AI as a dual force for productivity and disruption, estimating about 22% of South Asian jobs are exposed and urging upskilling, mobility measures, and safety nets to protect workers.