April 22, 2026
NEW DELHI – Even as the Iran conflict disrupts global energy flows, India is expected to remain the fastest-growing major economy in the Asia Pacific region, clocking 6.4 per cent growth in the current financial year, a United Nations report has said.
The projection, released by the Economic and Social Commission for Asia and the Pacific (ESCAP), comes against the backdrop of rising uncertainty triggered by the Strait of Hormuz disruptions and the broader fallout of the Iran war, underscoring India’s relative resilience compared to its regional peers.
According to the report, India’s real GDP growth slowed from 7.4 per cent in the previous fiscal year but is expected to pick up to 6.6 per cent in the next financial year. The estimates for the ongoing year were based on economic conditions as of March 17, when the Iran conflict was already impacting global energy markets.
India stays ahead as Asia Pacific growth slows
The Asia Pacific region, which stretches from Japan to Turkiye and remains a key driver of global economic activity, is projected to see overall growth slow from 4.1 per cent last year to 3.5 per cent this year, before a modest recovery to 3.8 per cent next year.
China’s economy, meanwhile, grew 5 per cent last year and is expected to expand by 4.3 per cent this year and 4.5 per cent next year. In South Asia, Pakistan recorded the weakest growth at 3 per cent last year, with projections of 2.6 per cent this year and 3.1 per cent in the next.
Domestic demand, services cushion external shocks
ESCAP noted that India’s strong growth in the previous fiscal year was driven by robust consumption, particularly in rural areas, along with goods and services tax rate cuts.
It also highlighted that US importers had front-loaded purchases from India ahead of anticipated tariff hikes. However, the report pointed out that economic momentum weakened in the latter half of 2025.
“However, economic activities moderated in the second half of 2025 as exports to the United States declined by 25 per cent following the introduction of 50 per cent tariffs in August 2025”, according to the report.
Despite these headwinds, “the services sector remained a key growth driver”, it added.
Productivity, population give India an edge
Hamza Malik, ESCAP’s director of Macroeconomic Policy and Financing, said India’s ability to sustain growth despite external pressures is linked to its productivity gains.
“At the end of the day, this sustained aspect of growth rate depends on the productivity of the country. So, if underlying productivity is growing, you can actually sustain high levels of growth”, he told reporters.
He also pointed to India’s large population as a structural advantage. “They have a lot more absorptive capacity to absorb labour into productive areas”, he said.
Malik added that India’s fiscal capacity to support vulnerable groups would further strengthen its position amid global uncertainties.
“It’s not that hard to now assess which are vulnerable populations or not, people who are much, much more dependent on food, for instance, and if the food prices are going up, they will need much more support”.