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Economic Times
35 minutes ago
- Business
- Economic Times
OECD pegs FY26 India growth at 6.3%
The OECD projects India's economic growth to remain strong and stable, forecasting a GDP growth of 6.3% in FY26 and 6.4% in FY27, driven by private consumption and lower income taxes. While global economic growth slows due to tariff wars, India's growth is expected to be largely unaffected. Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads Tired of too many ads? Remove Ads New Delhi: India will continue to experience "strong and broadly stable economic growth", OECD said Tuesday while pointing out that global economic growth is slowing more than expected as the tariff war takes a bigger toll on the US Organisation for Economic Co-operation and Development projects India to remain one of the world's fastest-growing economies in FY26, with its gross domestic product (GDP) growth forecast at 6.3%. The country's economic momentum will be driven by private consumption, supported by rising incomes and lower personal income taxes, it said in its economic outlook released her budget speech, finance minister Nirmala Sitharaman announced that individuals earning up to ₹12 lakh per annum would not need to pay income tax under the new tax FY27, the Paris-based organisation projects 6.4% growth. India's GDP grew to a four-quarter high of 7.4% in Q4 of FY25, bringing full-year growth to 6.5%, according to official data released last the OECD warned that new tariffs imposed by the US could dampen investor sentiment, especially in export-oriented sectors like chemicals, textiles and electronics, the overall impact on India's growth is expected to be India, the OECD projects inflation to moderate further to 4.1% in FY26 and 4% in FY27. It was 4.6% in will pave the way for further policy rate cuts by the central bank's monetary policy committee, according to ahead, the organisation recommended phasing out tax expenditures, rationalising subsidies and expanding tax bases would improve the quality and sustainability of public finances, create room for enhanced social protection, increased public investment and strong labour market the OECD highlighted the need for policies to focus on increasing female workforce participation through coordinated reforms in childcare access, safe and affordable transportation, skill development and enforcement of workplace global economy is projected to slow from 3.3% last year to 2.9% in 2025 and 2026, it said, trimming its estimates from March for growth of 3.1% this year and 3.0% next US President Donald Trump's policies have raised average US tariff rates from around 2.5% when he returned to the White House to 15.4%, highest since 1938, it said. India stares at a reciprocal tariff of 26%, which was put on hold for 90 days. However, a higher 10% tariff is effective on all imports into the the growth outlook would likely be even weaker if protectionism increases, further fuelling inflation, disrupting supply chains and rattling financial markets, the organisation GDP growth is anticipated to decline to 2.9% in 2025 from 3.3% in 2024, assuming tariff rates as of mid-May persist despite ongoing legal challenges."The slowdown is concentrated in the US, Canada and Mexico, with China and other economies expected to see smaller downward adjustments," it the US, economic growth is forecast to slow to 1.6% in 2025 from 2.8% in 2024, while China's growth is expected to fall to 4.7% from 5% in the same period.
Time of India
40 minutes ago
- Business
- Time of India
OECD pegs FY26 India growth at 6.3%
Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel New Delhi: India will continue to experience "strong and broadly stable economic growth", OECD said Tuesday while pointing out that global economic growth is slowing more than expected as the tariff war takes a bigger toll on the US Organisation for Economic Co-operation and Development projects India to remain one of the world's fastest-growing economies in FY26, with its gross domestic product (GDP) growth forecast at 6.3%. The country's economic momentum will be driven by private consumption, supported by rising incomes and lower personal income taxes, it said in its economic outlook released her budget speech, finance minister Nirmala Sitharaman announced that individuals earning up to ₹12 lakh per annum would not need to pay income tax under the new tax FY27, the Paris-based organisation projects 6.4% growth. India's GDP grew to a four-quarter high of 7.4% in Q4 of FY25, bringing full-year growth to 6.5%, according to official data released last the OECD warned that new tariffs imposed by the US could dampen investor sentiment, especially in export-oriented sectors like chemicals, textiles and electronics, the overall impact on India's growth is expected to be India, the OECD projects inflation to moderate further to 4.1% in FY26 and 4% in FY27. It was 4.6% in will pave the way for further policy rate cuts by the central bank's monetary policy committee, according to ahead, the organisation recommended phasing out tax expenditures, rationalising subsidies and expanding tax bases would improve the quality and sustainability of public finances, create room for enhanced social protection, increased public investment and strong labour market the OECD highlighted the need for policies to focus on increasing female workforce participation through coordinated reforms in childcare access, safe and affordable transportation, skill development and enforcement of workplace global economy is projected to slow from 3.3% last year to 2.9% in 2025 and 2026, it said, trimming its estimates from March for growth of 3.1% this year and 3.0% next US President Donald Trump's policies have raised average US tariff rates from around 2.5% when he returned to the White House to 15.4%, highest since 1938, it said. India stares at a reciprocal tariff of 26%, which was put on hold for 90 days. However, a higher 10% tariff is effective on all imports into the the growth outlook would likely be even weaker if protectionism increases, further fuelling inflation, disrupting supply chains and rattling financial markets, the organisation GDP growth is anticipated to decline to 2.9% in 2025 from 3.3% in 2024, assuming tariff rates as of mid-May persist despite ongoing legal challenges."The slowdown is concentrated in the US, Canada and Mexico, with China and other economies expected to see smaller downward adjustments," it the US, economic growth is forecast to slow to 1.6% in 2025 from 2.8% in 2024, while China's growth is expected to fall to 4.7% from 5% in the same period.
Mint
an hour ago
- Business
- Mint
OECD sees India growing 6.3% in FY26, projects global slowdown
New Delhi: The Organisation for Economic Co-operation and Development (OECD) on Tuesday lowered India's GDP growth rate a notch, as it projected global growth to slow down more than expected on account of Trump tariffs. The Paris-based OECD in its June Economic Outlook lowered India's growth rate to 6.3% in FY26 and 6.4% in FY27, compared with earlier projections, made in March, of 6.4% for FY26 and 6.6% for FY27. It projected global growth to slow to 2.9% in 2025 and 2026 from 3.3% in 2024, trimming its estimates from March. It said the US economy would grow only 1.6% in 2025 and 1.5% in 2026, citing US President Donald Trump's tariff announcements. Also read: India poised for growth amid global uncertainty, says finance ministry While private consumption in India is set to strengthen gradually, supported by rising real incomes, moderate inflation, tax cuts, and an improving labour market, investments will be buoyed by falling interest rates and strong public capital expenditure, the OECD report said. 'Monetary conditions remain restrictive, despite policy rate cuts in February and April. Headline inflation eased to 3.2% in April 2025 and is now within the central bank's target range of 4% (± 2%), largely due to a substantial moderation in food inflation, which accounts for nearly half of the CPI basket, and declining energy prices," it said. 'Easing food prices reflect a strong autumn harvest, and government interventions, such as export restrictions. As a major oil importer, India has benefited from lower global crude oil prices in recent months, which reduced domestic fuel costs and helped contain input costs in energy-intensive sectors such as transport, manufacturing, and agriculture," it added. However, the OECD warned that higher US tariffs could weigh on exports, while inflation is likely to remain near 4%, with risks from a weak monsoon or rising global commodity prices. Also read: India calls for end to export controls among BRICS nations Globally, rising trade barriers and policy uncertainty have hurt business and consumer confidence, leading the OECD to downgrade its growth forecast and warn of broad-based impacts on income and jobs. 'In the past few months, we have seen a significant increase in trade barriers as well as in economic and trade policy uncertainty. This sharp rise in uncertainty has negatively impacted business and consumer confidence and is set to hold back trade and investment," the report said. 'Weakened economic prospects will be felt around the world, with almost no exception. Lower growth and less trade will hit incomes and slow job growth," it added. India, facing potential GDP losses of up to 0.6% due to the Trump administration's escalated tariffs according to a Goldman Sachs analysis, is particularly vulnerable, especially in sectors like pharmaceuticals, textiles, and automobiles. In response, India is actively negotiating a bilateral trade agreement with the US, aiming to finalize it soon, to mitigate the impact and strengthen economic ties. 'Tariff increases and broader trade tensions may dampen investor sentiment, particularly in export-oriented sectors such as chemicals, textiles, and electronics. However, the overall GDP effects will be limited by the moderate share of exports in GDP, with merchandise exports towards the United States accounting for only 2.1% of GDP," the OECD report said. 'India has scope to accelerate trade liberalization, simplify customs procedures, and reduce tariffs. Further reforms are needed to improve the efficiency of logistics networks, upgrade digital infrastructure, and reduce regulatory uncertainty, especially in tax administration," it said. 'Enhancing the availability and accessibility of long-term finance, including through deepening capital markets and improving credit access for SMEs, would further strengthen the investment climate," it added. Also read: Centre eyes large dividend from public sector banks in FY25 Meanwhile, UBS on Tuesday upgraded India's FY26 GDP growth forecast to 6.4% from 6%, citing resilient domestic demand and potential trade gains, with stronger household consumption supported by favourable monsoon prospects and policy stimulus. India's Central government's economic outlook for FY26 is cautiously optimistic, with GDP growth forecast between 6.3% and 6.8%; the finance ministry expects to achieve the higher end if global conditions improve but remains confident of meeting the lower bound despite global challenges.
Axios
2 hours ago
- Business
- Axios
Forecast shows trade war bogging down economic growth
If we get stagflation this year — stagnant growth and elevated inflation — it may be short-lived. That's because the "stag" will eventually overpower the "flation." The big picture: If the trade war causes economic activity to slow down and unemployment rises, that slump could be enough to prevent a second-round inflation surge, after the initial tariff hit works its way through prices. Import taxes may prompt companies to raise their prices to adjust. But in an environment of sluggish growth, workers won't be in a position to demand outsize raises, and companies will be unable to hike prices as much as they might like. Driving the news: New forecasts from the Organisation for Economic Co-operation and Development show economic growth buckling under the weight of President Trump's trade war, alongside a temporary surge in inflation. The Paris-based group's forecasts are based on tariff policies from mid-May, including the reduction in tariff rates from the U.S.-China trade truce. Notably, the OECD also based its forecast on the expectation that the 2017 tax cuts will be extended. The group sees the global economy's fate as directly tied to Trump's tariff policies: If tensions ramp up, outcomes will be worse. If trade tensions dissipate, so do their gloomy projections. By the numbers: The worst of the economic pain is concentrated in North America, especially in the U.S. The OECD expects U.S. growth to slow to 1.6% this year, a significant fall from last year's 2.8% growth rate. The economy is expected to continue to slow in 2026. What they're saying:"Annual headline inflation is set to pick up to 3.9% by end‑2025 due to higher import prices but is expected to ease throughout 2026, aided by moderate GDP growth and higher unemployment," the OECD wrote in the report. "For most countries, inflation will stay a bit higher for longer ... even though we do think that by the end of '26, they'll be closer to their targets," OECD chief economist Álvaro Santos Pereira told reporters Tuesday morning. State of play: Goldman Sachs economists this week laid out their case for why inflation pressures likely won't linger. "The main reason is that we expect the economy to be weak this year, with GDP growing just 1%," they wrote. "We are skeptical about the prospects for prolonged high inflation amidst mediocre economic performance." "But if—contrary to our expectations—country-specific tariffs rise back to prohibitive rates or tariff escalation continues into 2026, we would worry more about high inflation persisting for longer." The intrigue: Most Fed officials so far have been hesitant to take a position on how tariffs will impact the economy. Fed governor Christopher Waller is the exception, with a recent speech underscoring his expectations that tariffs will cause a one-time inflationary bump. "[W]hatever the size of the tariffs, I expect the effects on inflation to be temporary, and most apparent in the second half of 2025," Waller said in a speech Sunday in South Korea. Yes, but: Waller is more optimistic and believes that economic demand will persist in the face of tariff-related price boosts, with limited pass-through to consumers.
Yahoo
2 hours ago
- Business
- Yahoo
Ukraine aims for OECD membership in 2026, says country's PM
Ukraine plans to join the Organisation for Economic Co-operation and Development (OECD) in 2026. Source: Shmyhal at an OECD ministerial meeting on 3 June 2025 Quote from Shmyhal: "Despite the war, Ukraine continues to implement reforms across all sectors to strengthen the economy and lay the foundation for joining the club of developed nations. We expect to join the OECD next year." Details: Shmyhal noted that the OECD launched a programme for Ukraine two years ago to support its accession. "Over the past two years, we've held 23 events with the OECD and adopted eight legal instruments," he added. "We established anti-corruption infrastructure and implemented the State Anti-Corruption Programme, which aligns 80% with OECD standards." Shmyhal highlighted progress in digitalisation, deregulation and alignment with OECD standards in privatisation and corporatisation. He cited the OECD's 2025 Economic Survey of Ukraine, which noted positive reform trends in public investment management and investment climate, as well as the Integrity Review, which recognised Ukraine's anti-corruption efforts. Quote: "As a result of our reforms, everyday corruption experienced by Ukrainians has fallen from 70% to 15% in recent years. This shift marks a transition from a post-Soviet to a European development model." Background: The OECD has stated that Ukraine's recovery and investment growth depend on strengthening the rule of law, easing regulatory burdens, promoting competition and innovation, as well as improving access to finance. Support Ukrainska Pravda on Patreon!
