The United Nations Economic and Social Commission for Asia and the Pacific (ESCAP) has confirmed India's robust economic outlook, projecting GDP growth at 6.4% for 2026 and 6.6% for 2027, indicating the country's continued position as a key driver of growth in the Asia-Pacific region. According to the latest ESCAP Economic and Social Survey of Asia and the Pacific 2026, India's growth rose to 7.4% in 2025, supported by robust consumption, especially from the rural economy along with goods and services tax rate cuts, and export frontloading ahead of the United States' tariffs. The report noted that economic activity in India slowed in the latter half of 2025, mainly due to a sharp 25% fall in exports to the United States after Washington imposed 50% tariffs in August last year, despite this setback, the services sector remained a major growth engine. The UN outlook aligns broadly with recent projections by the International Monetary Fund, which also expects India to remain the world's fastest-growing major economy.
According to the International Monetary Fund's latest World Economic Outlook, India has slipped one place to become the world's sixth-largest economy in nominal GDP terms during 2025, down from fifth position in 2024. The IMF's April 2026 WEO estimated India's nominal GDP at USD 3.92 trillion in 2025, while the UK overtook India with USD 4 trillion. The United States remained the world's largest economy at USD 32.38 trillion, followed by China at USD 20.85 trillion and Germany at USD 5.45 trillion. As per The Times of India, this shift is largely attributed to the Indian rupee's depreciation from ₹84.57 per US dollar in 2024 to ₹88.48 in 2025, with further weakening expected to ₹92.59 this year. The rupee has faced pressure due to high crude oil prices, strong demand for the US dollar and geopolitical tensions in West Asia, with the currency trading in the ₹94-95 per dollar range before stabilising around ₹93.39.
The primary factor behind India's ranking decline is the Indian rupee's depreciation from ₹84.57 per US dollar in 2024 to ₹88.48 in 2025, with further weakening expected to ₹92.59 this year. According to The Times of India, several factors contributed to the rupee's decline, including capital outflows, uncertainty related to India-US trade deal up until February, and the recent Middle East conflict which has raised crude oil prices and India's import bill. The RBI while actively managing volatility in the forex market, is not targeting any particular level of the rupee. Additionally, India's adoption of a new base year for its latest GDP series has also impacted rankings, with the new calculation methodology and base year revision presenting a more accurate picture of the economy. As per The Times of India, India's GDP estimates have seen a drop over one year, while UK's nominal GDP has grown better than expected. The IMF calculates each country's GDP in local currency and then converts it to US dollars for global comparison, meaning that when the rupee weakens, India's economic output in dollar terms shrinks mechanically, even if real growth remains strong.
ESCAP highlighted that foreign direct investment (FDI) inflows into developing Asia-Pacific economies declined by 2% in 2025 amid trade tensions and geopolitical uncertainty, even as global FDI flows rose. However, India remained among the top destinations for greenfield investments, attracting about $50 billion in the first three quarters of the year. The report also pointed to the importance of remittances in sustaining household consumption, noting that India, the world's largest remittance recipient with $137 billion in 2024, could face challenges after the United States imposed a 1% tax on such transfers from January 2026. Despite these challenges, the UN report suggests India's economic fundamentals remain strong, supported by domestic demand, policy support and its growing role in global supply chains.
Despite short-term fluctuations in rankings, India's long-term economic trajectory remains robust with the UN projecting continued strong growth momentum. According to The Times of India, while India will be the sixth largest economy in FY27, it is likely to overtake both the UK and Japan to bag the fourth spot in FY28. India is projected to be the sixth largest economy in 2026, subject to exchange rate movements, but next year it is expected to not just overtake the UK but also Japan. If UN projections are accurate, it is unlikely that India will be the third largest economy until 2031. India's GDP is projected to increase almost 11% this year to ₹385 lakh crore in rupee terms, with the economy maintaining strong growth momentum. By 2031, India is expected to consolidate its position as the third-largest economy with GDP reaching $6.79 trillion, while the United States and China are expected to retain their top two positions globally. However, achieving the $5 trillion economy target by 2027 may require revision, as reaching that milestone from current levels would require approximately 20% nominal GDP growth in dollar terms, which is significantly higher than India's average GDP growth of around 7% over the past decade.
