The Asian Development Bank (ADB) has estimated a robust economic future for India, predicting GDP growth of 6.5% in 2025 and another higher 6.7% in 2026. The positive prognosis is due to robust domestic consumption, good monsoon prospects, and expected easing of monetary policy.
Inflation is also set to stay well within manageable limits. As per ADB's recent update, India's inflation rate for the current year stands at 3.8% and 4.0% for 2026—well within Reserve Bank of India's target range.
One of the major contributory factors in this moderation in inflation has been the fall in food prices. India's Consumer Price Index (CPI) fell to 2.1% in June, the lowest level in more than six years (77 months) as food inflation went into negative.
Earlier in July, the Confederation of Indian Industry (CII) echoed similar confidence, predicting that India’s real GDP would expand within a 6.4% to 6.7% range for the current fiscal year. This reinforces India’s status as the fastest-growing major economy globally.
However, at the regional level, the ADB has lowered its growth projections for developing Asia and the Pacific. Poorer export performance in the face of increasing U.S. tariffs, uncertain global trade conditions, and weaker domestic demand are the reasons for a more conservative outlook.
Based on the Asian Development Outlook (ADO) July 2025, the region is projected to grow 4.7% in 2025—a 0.2 percentage point decrease from the April projection. Projections for 2026 also have been revised down slightly to 4.6% from the previous estimate of 4.7%.
ADB warned that rising U.S. tariffs and deteriorating trade tensions may further affect the region's growth path. Other potential threats are global conflicts and regional geopolitical tensions, which might interfere with the supply chain and increase the cost of energy, and possible weakening in China's already weak real estate market.
"Asia and the Pacific rode out an increasingly difficult outside world this year. But the economic prospects have deteriorated in the face of rising risks and global uncertainty," said Albert Park, ADB Chief Economist.
Regional economies must strengthen their fundamental economic foundations and continue to push open trade and regional cooperation to support investment, job growth, and sustained growth, Park pointed out.
China, the region's biggest economy, will grow by 4.7% in 2025 and decelerate to 4.3% in 2026—similar to previous estimates. Southeast Asian economies are forecast to feel the impact of worsening trade flows and uncertainty most, with ADB revising the subregion growth forecast down to 4.2% for the current year and to 4.3% for the following year—both about 0.5 percentage points lower than in April.
