UN Report Forecasts Robust Growth for India's Economy Through 2027
India's economy is set to maintain its momentum as a primary growth engine in the Asia-Pacific region, with projections indicating a growth rate of 6.4 per cent in 2026 and 6.6 per cent in 2027, according to the latest United Nations report. This outlook underscores the country's resilient economic performance amid global challenges.
Strong Regional Performance Led by India
The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP), in its Economic and Social Survey of Asia and the Pacific 2026, revealed that the region's economies expanded by 5.4 per cent in 2025, up from 5.2 per cent in 2024. This increase was largely propelled by India's robust economic activity.
India's growth surged to 7.4 per cent in 2025, driven by factors such as robust consumption, particularly from the rural economy, reductions in goods and services tax rates, and export frontloading ahead of anticipated tariffs from the United States.
Moderation in Growth Amid Global Headwinds
Despite the strong performance, the report noted a slowdown in India's economic activity during the latter half of 2025. This deceleration was primarily due to a sharp 25 per cent decline in exports to the United States following Washington's imposition of 50 per cent tariffs in August 2025. However, the services sector continued to serve as a major growth engine, mitigating some of the impacts.
Inflation is expected to remain relatively stable, with projections of 4.4 per cent in 2026 and 4.3 per cent in 2027. This indicates a controlled price environment that supports steady economic expansion.
FDI, Remittances, and External Pressures
ESCAP highlighted that foreign direct investment (FDI) inflows into developing Asia-Pacific economies decreased by 2 per cent in 2025, amid ongoing trade tensions and geopolitical uncertainty, even as global FDI flows increased. India remained a top destination for greenfield investments, attracting approximately $50 billion in the first three quarters of the year.
The report also emphasized the critical role of remittances in sustaining household consumption. India, as the world's largest remittance recipient with $137 billion in 2024, may face challenges due to a new 1 per cent tax on such transfers imposed by the United States starting January 2026.
Green Transition and Job Creation Initiatives
ESCAP underscored the importance of the clean energy transition in shaping future economic growth. Estimates indicate that there are 16.6 million green jobs globally, with India accounting for about 1.3 million of these positions.
Policies such as India's production-linked incentive scheme were highlighted as key tools to boost domestic manufacturing in sectors like solar energy, batteries, and green hydrogen. Governments can leverage the energy transition to foster new domestic industries, the report stated, stressing the significance of targeted industrial policies.
Alignment with Global Economic Outlook
The UN's projections align broadly with recent forecasts from the International Monetary Fund, which also expects India to remain the world's fastest-growing major economy. However, global risks persist, particularly from ongoing geopolitical tensions and trade disruptions.
Despite these uncertainties, the UN report suggests that India's economic fundamentals remain strong, supported by domestic demand, policy initiatives, and its expanding role in global supply chains.
