Despite Trump Tariffs, India Remains Fastest Growing Economy: World Bank

The World Bank has raised its forecast for India's GDP growth in the current financial year by 20 basis points to 6.5 per cent on the backs of being the fastest growing economy, and rising consumption growth among other key factors in play. 

"India is expected to remain the world's fastest-growing major economy, underpinned by continued strength in consumption growth," the World Bank said in the South Asia Development Update report for October. "The government's reforms to the Goods and Services Tax (GST) – reducing the number of tax brackets and simplifying compliance – are expected to support activity."

Meanwhile, it remains cautious on growth in FY27 as a result of Trump tariffs, which are expected to disrupt export centric industries. The US levy imposition of 50% tariff affects three-quarters of India's goods exports to the US. 

The 50% tariff on India is one of the highest in the world, even as New Delhi and Washington are working on a bilateral trade agreement. Almost a fifth of India's goods exports went to the US in 2024, equivalent to about 2% of GDP, according to the report.

The World Bank follows the Reserve Bank of India in raising the growth projection for the current financial year, after GDP grew quicker than expectations at 7.8% in the June quarter. The RBI last week raised its GDP growth forecast for FY26 to 6.8% from 6.5%.

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"Growth was supported by strong private consumption and investment and boosted by lower-than-expected prices," the World Bank said. 

“Investment growth remains robust, supported by public infrastructure projects, strong credit growth, and loosening monetary policy,” it said. 

As of now, the World Bank raised the growth forecast for South Asia by 50 bps to 6.6% for 2025. For 2026, it lowered the growth forecast for the region by 60 bps to 5.8%.