Key Points
India projected to maintain strong economic growth at 6.4-6.6%
Global GDP expected to moderate to 3.1-3.0%
Trade barriers and policy uncertainty impact global economic outlook
The OECD report projects China’s growth rate at 4.8 per cent in 2025 and at 4.4 per cent in 2026.
The OECD’s projections are more or less in line with the RBI’s forecast of India’s growth prospects. In its outlook released in February, the central bank’s monetary policy committee kept the growth forecast at 6.7 per cent for FY26. The Economic Survey pegged growth between 6.3 per cent and 6.8 per cent for FY26.
"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," OECD Secretary-General Mathias Cormann said.
"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 OECD report expects global GDP growth to moderate from 3.2 per cent in 2024 to 3.1 per cent in 2025 and 3.0 per cent in 2026, with higher trade barriers in several G20 economies and increased policy uncertainty weighing on investment and household spending. Annual real GDP growth in the United States is projected to slow from its very strong recent pace, to 2.2 per cent in 2025 and 1.6 per cent in 2026.
Euro area's real GDP growth is projected to be 1.0 per cent in 2025 and 1.2 per cent in 2026, as heightened uncertainty keeps growth subdued.
The report states that the global economy remained resilient in 2024, expanding at a solid annualised pace of 3.2 per cent through the second half of the year. However, recent activity indicators point to a softening of global growth prospects. Business and consumer sentiment have weakened in some countries. Inflationary pressures continue to linger in many economies. At the same time, policy uncertainty has been high and significant risks remain.
Further fragmentation of the global economy is a key concern. Higher-than-expected inflation would prompt more restrictive monetary policy and could give rise to disruptive repricing in financial markets. On the upside, agreements that lower tariffs from current levels could result in stronger growth, the report added.
