India remained the world’s fastest-growing large economy, the World Bank said on Thursday, projecting GDP growth of 6.6% in 2026 following a 7% expansion in 2025.
Growth rates in India were expected to remain fairly high for the next two decades, World Bank chief economist Indermit Gill said.
The assessment came as the lender cut its global growth forecast for 2026 to 2.5%, citing heightened geopolitical tensions and the conflict in the Middle East. It also warned that global growth could slow sharply to 1.3% if disruptions to energy supplies intensify and trigger significant stress in financial markets.
The downgrade reflects the impact of the ongoing conflict involving Iran, which has disrupted energy markets and driven up oil prices. The closure of the Strait of Hormuz has raised concerns about energy security, renewed inflationary pressures and tighter monetary policy across several economies.
The World Bank lowered growth forecasts for nearly two-thirds of countries, with the largest revisions affecting energy-exporting economies in the Middle East. Growth in the Middle East, North Africa, Afghanistan and Pakistan region is now expected at 1.6% in 2026, down sharply from 4% in 2025.
The bank’s baseline scenario assumes Brent crude oil prices averaging $94 per barrel this year, up 36% from 2025 levels, and expects the most severe energy supply disruptions to ease by the end of July. Under this scenario, global inflation is projected at 4%.
However, it warned that if supply disruptions persist and oil prices average $115 per barrel, global growth could slow to 2.1% while inflation could rise to 4.4%.
In a more adverse scenario involving financial market stress triggered by the energy shock, global growth could fall to just 1.3%, the bank said.
“These risk scenarios show how quickly the outlook could weaken if energy and financial pressure reinforce each other,” said Ayhan Kose, the World Bank’s deputy chief economist.
World Bank Chief Economist Indermit Gill said the global economy was less resilient than it had been during previous periods of economic uncertainty.
“The world economy is a lot less resilient today than it was in 2008 and even as compared with 2018,” Gill told reporters, pointing to persistent policy uncertainty, inflationary pressures and elevated interest rates.
Despite the weaker global outlook, India continues to outperform most major economies. The World Bank expects China’s economy to grow 4.2% in 2026 after expanding 5% in 2025. Growth in the United States is forecast at 2.2% in 2026, while the euro zone is expected to expand 0.8% and Japan 0.7%.
The bank said growth in developing economies is projected to slow to 3.6% in 2026 from 4.4% in 2025, warning that many countries risk experiencing a prolonged period of weak income growth.
Global growth is expected to recover modestly to 2.8% in 2027 and 2028, although that would remain below the average pace recorded during the previous decade, weighed down by slower population growth, weaker investment, rising public debt and subdued trade expansion.
(Inputs from Reuters)
