India’s economic growth target for 2026 was lowered from 6.6 per cent to 6.4 per cent, citing global uncertainties and economic shocks resulting from the ongoing West Asia crisis, as per United Nations (UN) report.
According to report released by the UN Department of Economic and Social Affairs (UN DESA) on Tuesday, India, however, remains one of the fastest-growing major economies.
Global financial markets have so far remained resilient, absorbing the initial shock in broadly orderly fashion. However, higher energy prices have lifted inflation expectations, driving short‑term bond yields higher, it stated.
For developing countries, this has tightened external financing conditions and weakened fiscal positions, particularly where policy space is already limited.
“The Middle East crisis has intensified strains across developing economies,” said Li Junhua, United Nations Under‑Secretary‑General for Economic and Social Affairs. “Rising borrowing costs and renewed capital‑flow pressures risk deepening debt vulnerabilities and constraining the resources available for sustainable development at a critical moment.”
The report noted that the impact of the crisis is highly uneven, with the most severe damage concentrated in Western Asia. Growth in the region is projected to plunge from 3.6 per cent in 2025 to 1.4 per cent in 2026, driven not only by the energy shock but also by direct infrastructure damage and severe disruptions to oil production, trade and tourism.
Meanwhile, the growth in the European Union is projected to slow from 1.5 per cent in 2025 to 1.1 per cent in 2026, while the United Kingdom faces a steeper moderation, from 1.4 per cent to 0.7 per cent.
Furthermore, the report added that China’s diversified energy mix, sizable strategic reserves, and proactive policy support are providing an important buffer, with growth projected to moderate from 5.0 per cent in 2025 to 4.6 per cent in 2026.
