Synopsis : The Asian Development Bank (ADB) has revised India’s FY26 GDP growth forecast down to 6.5%, citing US trade protectionism and global supply chain disruptions. Despite the downgrade, India remains one of the world’s fastest-growing major economies, driven by domestic demand and a resilient services sector.
The Asian Development Bank (ADB) has lowered India’s GDP growth projection for FY26 to 6.5%, down from its earlier estimate of 6.7%, reflecting rising global trade pressures and policy uncertainty stemming from recent US tariff actions. Released on July 23 in its Asian Development Outlook, the report cites the impact of US trade protectionism on investor sentiment and export prospects for developing economies, including India.
Despite the revision, ADB reaffirmed that India will continue to be among the fastest-growing major economies globally, supported by strong domestic demand, favourable monsoon conditions, and a robust services sector. Rural consumption is expected to remain strong due to improved rural incomes, while agriculture and services are projected to offset weaker export performance.
ADB projects inflation for FY26 at 3.8%, slightly lower than previous estimates, driven by the expectation of moderated food prices amid healthy agricultural output. The report also anticipates potential monetary policy easing and infrastructure-led public spending, which could help cushion external shocks to the Indian economy.
Looking forward, ADB expects India’s growth to rebound to 6.7% in FY27 if global conditions stabilise and investment sentiment improves. However, downside risks persist, including geopolitical tensions and continued global supply chain disruptions, which could further weigh on India’s trade and investment flows.
Globally, ADB has reduced its growth forecast for developing Asia to 4.7% in 2025 and 4.6% in 2026, down from 4.9% and 4.7% respectively, citing the broader impacts of US tariffs, a slowdown in China, and persistent supply chain issues. Within South Asia, India remains the key driver of growth, with the region projected to expand at 6.0% in 2025 and 6.2% in 2026.
As India navigates these global headwinds, the country’s domestic resilience, policy support, and structural strengths will remain critical to sustaining momentum in a challenging global trade environment.
Disclaimer : This article is for informational purposes only and does not constitute financial or investment advice. Please consult qualified professionals or official reports before making economic or investment decisions.
