Global Growth Forecast 2026: India Leads as US, Europe and China Face Slower Expansion

The global economy is expected to continue its expansion in 2026, albeit at a moderated pace, with significant variations across different regions. While India is projected to lead the pack with robust growth, the United States, Europe, and China are anticipated to experience slower expansion.

India: A Rising Star

India's economy is poised for significant growth in 2026, driven by strong domestic demand and strategic interventions from monetary and fiscal authorities. A Standard Chartered report projects that India's real GDP growth will become more broad-based, supported by policy measures such as RBI rate cuts, liquidity injections, income tax reductions, and GST rationalization. These measures are expected to stimulate domestic demand and keep inflation in check. While different reports vary slightly, most forecasts predict a GDP growth of around 6.7% to 7% for India in 2026. Goldman Sachs projects a GDP growth of 6.7%, and other economists forecast a 6.8% expansion. Despite external challenges, India is expected to remain the fastest-growing major economy, driven by resilient consumption and investment.

United States: Steady but Slow

The U.S. economy is expected to grow at a steady but slower pace in 2026. S&P Global Ratings projects a 2% real GDP growth, a modest increase from previous forecasts. This growth is expected to be supported by expansionary fiscal policies, tax cuts, and a reduced drag from tariffs. Additionally, investments in artificial intelligence (AI) infrastructure are expected to be a primary driver of economic expansion. Consumer spending is projected to moderate, while inflation is expected to remain above 2%, raising affordability concerns. Despite these challenges, the U.S. economy is expected to remain resilient, with the Federal Reserve likely to cut rates to support growth.

Europe: Modest Growth Amidst Challenges

Europe's economic growth is expected to remain modest in 2026, facing structural challenges and global uncertainty. KPMG's latest European Economic Outlook forecasts a 1.1% growth for the Eurozone economy. Germany, traditionally Europe's economic engine, is expected to see a noticeable pickup in growth following years of stagnation. Increased public spending on infrastructure and defense in Germany is expected to offset consolidation efforts in other countries. However, subdued consumer confidence and a cooling labor market in Northern and Eastern Europe are expected to temper spending growth. Inflation in the Eurozone is projected to fall below the European Central Bank's target, leading to stable interest rates throughout 2026.

China: Slower Expansion but Continued Resilience

China's economic growth is projected to slow modestly in 2026, but the nation is expected to remain a key contributor to the global economy. UBS forecasts a GDP growth of 4.5%. Strong exports and continued policy support for domestic demand, especially consumption, are expected to drive growth. The Chinese government aims to boost consumption as a top priority, with the 15th Five-Year Plan emphasizing innovation and technological self-reliance. However, the property market adjustment is expected to continue, posing a drag on GDP growth. The International Monetary Fund (IMF) has raised China's growth forecast to 4.5% for 2026, driven by macroeconomic policy stimulus measures and lower-than-expected tariffs on exports.

Global Economic Overview

Overall, the global economy is projected to expand at a slower pace in 2026, with the UNCTAD projecting a growth of 2.6%. Global trade disputes, geopolitical uncertainty, and limited political maneuvering are expected to contribute to this slowdown. However, continued expansion is expected, driven by resilient consumption and capital spending. Inflation is expected to moderate in most major economies, giving monetary policymakers room to cut rates. While downside risks persist, the global economy is expected to remain resilient, with India leading the way in growth while the US, Europe, and China navigate their own economic challenges.