OECD lowers India’s growth forecast for FY26 to 6.4%

New Delhi: The Organisation for Economic Co-operation and Development (OECD) has revised downwards India’s economic growth forecast for FY26 to 6.4% from 6.9% projected in its December outlook, amid rising global uncertainty.

While many countries are expected to experience a decline in economic growth in 2026 compared to the previous year, India stands out as an exception.

For FY27, the OECD has also lowered gross domestic product (GDP) growth estimate to 6.6%, from the earlier 6.8%. For FY25, OECD has pegged the growth at 6.3% compared to the National Statistical Office (NSO) estimate of 6.5%.

Economic growth in the United States is projected to slow to 2.2% in 2025 and further to 1.6% in 2026. In China, growth is expected to decelerate to 4.8% in 2025 and 4.4% in 2026, according to the OECD.

India’s slowdown will be relatively mild, the OECD Interim Economic Outlook released on Monday said.

The report stated, “The slowdown is projected to be less pronounced in India and Indonesia, with both economies experiencing some support for export growth as they attract new business that is diverted from those exporting countries facing steeper tariff rate increases.”Indonesia’s economy is expected to grow by 4.9% in 2025 and 5% in 2026.The OECD highlighted that India’s economic performance remained strong in the fourth quarter of 2024. Official data released last month showed a 6.2% GDP growth in the October-December period.

Despite global challenges, the OECD remains optimistic about India’s economic resilience.

“The global economy has shown some real resilience, with growth remaining steady and inflation moving downwards. However, some signs of weakness have emerged, driven by heightened policy uncertainty,” said OECD secretary-general Mathias Cormann.

“Increasing trade restrictions will contribute to higher costs both for production and consumption. It remains essential to ensure a well-functioning, rules-based international trading system and to keep markets open,” he added.

The global economic outlook has been revised downwards from 3.3% to 3.1% for 2025, and to 3% for 2026.

In terms of inflation, the OECD raised India’s forecast to 4.5% in FY26 from 4.8% earlier. For FY27, the projections were raised to 4.1% from 4%.