UN DESA Forecasts India’s Economy to Grow at 7.2% in FY26 Amid Global Trade Headwinds
The United Nations Department of Economic and Social Affairs (UN DESA) has projected India's economic growth at 7.2% for the current fiscal year. While slightly lower than the Indian government's estimate of 7.4%, the report highlights that robust domestic consumption and significant public investment in infrastructure will largely offset the negative impacts of higher US tariffs. The report notes that 18% of Indian exports are US-bound, making them vulnerable to trade policy changes. However, strong demand from other markets like Europe and West Asia, along with tax reforms, provides a buffer.
Key Points
- India's growth is supported by gross fixed capital formation in physical and digital infrastructure.
- The Indian rupee faced depreciation pressures due to portfolio outflows and US tariff concerns but remains supported by strong economic performance.
- China's fixed asset investment saw a contraction due to property sector weakness, contrasting with India's expansion.
- Real effective exchange rate (REER) improved to 100.9 in 2025 from 104.7 in 2024.
Exam Facts
- UN DESA growth projection for FY26 is 7.2%.
- Government of India estimate is 7.4%.
- 18% of Indian exports are destined for the United States.
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