OECD pegs India GDP growth at 7.6 per cent for 2025-26
The OECD has projected India’s GDP growth at 7.6 per cent for 2025-26, maintaining its position as the fastest-growing major economy. The report warns that Middle East conflict and rising energy prices may impact global growth and inflation trends
New Delhi: The Organisation for Economic Cooperation and Development (OECD) on Thursday pegged India’s GDP growth rate at 7.6 per cent for 2025-26, 6.1 per cent for 2026-27 and 6.4 per cent for 2027-28, with the country remaining the world’s fastest-growing major economy.
The OECD’s interim Economic Outlook report states that conflict in the Middle East is testing the resilience of the global economy. The halt in shipments through the Strait of Hormuz and the closure and damage of some energy infrastructure have generated a surge in energy prices and disrupted the global supply of energy and other important commodities, such as fertilisers. This is raising costs, weighing on demand and adding to inflationary pressures.
“China’s growth rate is anticipated to ease from 5.0 per cent in 2025 to 4.4 per cent in 2026 and 4.3 per cent in 2027, as government subsidies for consumers end, energy import prices move higher, adjustment in the real estate sector continues, and anti-involution measures weaken investment growth,” the report stated.
The resulting change in the effective tariffs applied by the United States varies markedly across economies, with sizeable reductions for several emerging-market economies, including Brazil, China, India, and Indonesia, the report added.
In the emerging-market economies, headline inflation is projected to increase from 4.1 per cent in 2025 to 4.4 per cent in 2026 before easing to 3.3 per cent in 2027.
In India, the fading deflationary impact of past food and energy price-reducing shocks will be exacerbated by the recent surge in global energy prices, pushing inflation up from 2 per cent in FY 2025-26 to 5.1 per cent in FY 2026-27 and 4.1 per cent in FY 2027-28, the report states.
Amongst the emerging-market economies, India’s central bank is projected to raise policy rates temporarily in the second quarter of 2026 to help offset stronger inflationary pressures, it said.
Global GDP growth is projected to remain broadly stable at 2.9 per cent in 2026 before edging up to 3 per cent in 2027, sustained by robust technology-related investment and gradually lower effective tariff rates. However, the evolving conflict in the Middle East weighs on growth and generates significant uncertainty around global demand. These projections assume that the current energy market disruption is temporary, with prices easing from mid-2026 onward, the report stated.
However, a prolonged disruption to shipments through the Strait of Hormuz or sustained closures of oil and gas facilities could lead to significantly worse outcomes, it warned.
Reducing reliance on imported fossil fuels and accelerating energy efficiency measures, such as scaling up clean energy capacity, upgrading electricity grids, and introducing accelerated permitting procedures, can lower exposure to geopolitical shocks, ease cost pressures for households and firms, and support long-term resilience, it added.