UN projects India’s GDP growth to moderate to 6.6% in 2026 from 7.4% in 2025 amid high US tariffs

For 2027, the UN has projected India’s economy to grow at 6.7 percent.

• UN projects India's GDP growth to slow to 6.6% in 2026 due to US tariffs
• Strong consumption and public investment to offset tariff impact
• Key exports like electronics expected to remain exempt from US tariffs

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The United Nations has projected India’s GDP growth to moderate to 6.6 percent in 2026 from 7.4 percent in 2025, largely due to 50 percent tariffs imposed by the United States on India’s exports.

However, the UN says, in its latest report 'World Economic Situation and Prospects 2026', that India’s growth is supported by resilient consumption and strong public investment, which should largely offset the adverse impact of higher United States tariffs. "Recent tax reforms and monetary easing should provide additional near-term support," it says.

For 2027, the UN has projected India’s economy to grow at 6.7 percent.

The UN says that United States tariffs could weigh on export performance in 2026 if current rates persist, as the US market accounts for about 18 percent of total exports from India. "While tariffs may adversely affect some product categories, key exports such as electronics and smartphones are expected to remain exempt," said the UN report.

Moreover, strong demand from other major markets, including Europe and the Middle East, is projected to partially offset the impact, it added. "On the supply side, continued expansion in manufacturing and services sector will remain a key driver of growth throughout the forecast period."

On the rupee, the UN said that the Indian currency stabilized against the US dollar in the first half of the year, supported by broad dollar weakness. "However, in the second half, the Indian rupee edged lower following stronger than-expected growth in the United States and ongoing trade negotiations. Portfolio outflows and higher United States tariffs added to depreciation pressures on the Indian rupee."

"Nonetheless, robust economic performance in India is expected to provide support for the country’s currency in the near term," the UN report noted.

On South Asia, the report says that the region’s economic outlook remains robust, largely due to strong private consumption and public investment. “Inflation across the region declined markedly in 2025, with rates in most economies at or below central bank targets and long-term averages,” it said.

Average consumer price inflation is projected to edge up from an estimated 8.3 per cent in 2025 to 8.7 per cent in 2026, ranging from 3.2 per cent in Nepal and 4.1 per cent in India to 35.4 per cent in the Islamic Republic of Iran, the report said.

Meanwhile, the global economic outlook remains clouded by elevated macroeconomic uncertainties, shifting trade policies, and persistent fiscal challenges, the report said.

"Geopolitical tensions and financial risks add to these pressures, leaving the global economy fragile. In 2025, a sharp increase in United States tariffs created new trade frictions, though the absence of broader escalation helped limit immediate disruptions to international commerce," it said.

Despite the tariff shock, global economic activity proved resilient, supported by front-loaded shipments, inventory accumulation, and solid consumer spending amid monetary easing and broadly stable labour markets, the report added. "Continued macroeconomic policy support is expected to cushion the impact of higher tariffs, but growth in trade and overall activity are likely to moderate in the near term."