India’s economy is set to grow stronger than expected next year, according to a fresh report from the Organization for Economic Cooperation and Development (OECD). The group now predicts India’s GDP growth will hit 6.7% in 2025, up from their earlier estimate of 6.3% back in June. This boost comes mainly from solid domestic demand and key improvements to the Goods and Services Tax (GST) system. For 2026, they see growth easing a bit to 6.2%.
Even so, higher tariffs around the world could slow down India’s exports. But the OECD expects overall activity to stay strong, thanks to looser monetary and fiscal policies, including those GST reforms. On a brighter note, food price inflation in India has dropped sharply lately, thanks to better local supplies and limits on exports.
Shifting to the bigger picture, the global economy showed more bounce than many thought in the first half of 2025, particularly in emerging markets like India. The OECD bumped up its worldwide growth forecast to 3.2% for this year, while holding steady at 2.9% for 2026. That’s amid worries that U.S. tariffs will crimp investment and trade later in the year.
Companies rushed to produce and ship goods before these U.S. tariffs kicked in harder, which helped fuel industrial growth in most G20 countries during the year’s first half—beating the pace from 2024.
U.S. tariffs on imports from nearly every country have climbed since May, hitting an average rate of 19.5% by late August. That’s the steepest level since the 1930s. Already, we’re seeing ripples: shoppers are changing habits, job markets are cooling with rising unemployment and fewer openings in some spots, and progress on taming inflation has hit a snag. Food prices are up again, and service costs stay sticky in many places.
Looking forward, challenges could drag things down further—think more tariff hikes, budget worries, or fresh inflation spikes. Swings in financial markets, like those wild cryptocurrency prices, might add to instability too. But there are silver linings: if trade barriers ease or artificial intelligence (AI) breakthroughs speed up, growth could surprise on the upside.
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