World Bank cuts India’s FY26 growth forecast to 6.3% on subdued exports, investments

India is projected to maintain the fastest growth rate among the world’s largest economies. File
| Photo Credit: Reuters

The World Bank has cut its growth forecast for India to 6.3% in the current financial year 2025-26 from the 6.7% it had projected in January, citing dampened export and investment growth. This 0.4% point cut in India’s growth forecast is in line with an equivalent reduction in the global growth forecast to 2.3%.

Also Read | Extreme poverty in India down to 5.3% in 2022-23: World Bank

The World Bank’s new forecast for India — included in the June 2025 update of its Global Economic Prospects report released on Tuesday (June 10, 2025) in Washington — is lower than the 6.5% growth for 2025-26 that the Reserve Bank of India had predicted in its latest monetary policy announcement on June 6.

“India is projected to maintain the fastest growth rate among the world’s largest economies, at 6.3% in FY 2025-26,” the report said. “Nevertheless, the forecast for growth in FY 2025-26 has been downgraded by 0.4 percentage point relative to January projections, with exports dampened by weaker activity in key trading partners and rising global trade barriers.” 

“Investment growth is expected to slow, primarily reflecting a surge in global policy uncertainty,” it added. 

However, the World Bank also predicted that growth is expected to rise again in the next two years (FY27 and FY28) to 6.6 percent a year, on average, partly supported by robust services activity that is likely to enable a revival in export growth.  

“Activity has moderated in India—South Asia’s largest economy—largely reflecting a slowdown in industrial production, offsetting steady services activity and the recovery in agricultural output,” the report added.

Regarding global growth, the World Bank noted that heightened trade tensions and policy uncertainty are expected to slow global growth this year to its slowest pace since 2008, not counting outright global recessions.

“This year alone, our forecasts indicate the upheaval will slice nearly half a percentage point off the global gross domestic product (GDP) growth rate that had been expected at the start of the year, cutting it to 2.3%,” World Bank Chief Economist Indermit Gill wrote in a blog post that accompanied the report. 

“That’s the weakest performance in 17 years, outside of outright global recessions,” he added. “By 2027, global GDP growth is expected to average just 2.5% in the 2020s—the slowest pace of any decade since the 1960s.”