India’s economy is set to expand by 6.5 per cent in 2025 and strengthen further to 6.7 per cent in 2026, driven by strong domestic demand, a favourable monsoon season, and anticipated monetary easing, the Asian Development Bank (ADB) said in its latest economic outlook released Wednesday.
Inflation is also projected to remain within manageable levels, with the ADB estimating it at 3.8 per cent in 2025 and 4.0 per cent the following year, aligning well with the Reserve Bank of India’s inflation targets. Notably, Consumer Price Index (CPI) inflation dropped to 2.1 per cent in June, marking a 77-month low, aided by falling food prices.
These projections reinforce India’s position as the world’s fastest-growing major economy. Earlier this month, the Confederation of Indian Industry (CII) also estimated India’s real GDP growth in the 6.4 to 6.7 per cent range for the current fiscal year.
However, the ADB has revised downward its growth forecast for developing Asia and the Pacific, citing a weaker global trade environment. The region is now expected to grow at 4.7 per cent in 2025, down 0.2 percentage points from April estimates, and 4.6 per cent in 2026.
The downgrade reflects subdued export prospects due to rising US tariffs, trade uncertainties, and weakening domestic demand across several countries. Additional risks include geopolitical conflicts, disruptions in global supply chains, energy price volatility, and a sharper-than-expected decline in China’s property market.
ADB Chief Economist Albert Park noted that despite the challenging global context, Asia and the Pacific have managed to remain resilient. “However, the outlook has softened due to intensifying global risks,” he said. Park urged regional economies to focus on strengthening economic fundamentals, supporting open trade, and deepening regional integration to sustain investment, job creation, and long-term growth.
China’s growth projections remain unchanged at 4.7 per cent for 2025 and 4.3 per cent for 2026. Meanwhile, Southeast Asia is expected to bear the brunt of worsening trade conditions, with growth now forecast at 4.2 per cent this year and 4.3 per cent next year, both revised down by about half a percentage point from earlier estimates.
