India Defies Iran War Fallout, Tops Asia-Pacific Growth at 6.4%

The report released here on Monday by the Economic and Social Commission for Asia and the Pacific, better known by the acronym ESCAP, said India's real gross domestic product (GDP) growth moderated from 7.4 per cent last fiscal year and is projected to increase to 6.6 per cent next fiscal year.

The projections for this financial year were based on the situation on March 17, when the Iran conflict was underway, and the effects from the closure of the Strait of Hormuz were beginning to be felt.

With the Asia Pacific region as the engines of growth for the world, India's top spot in the region also translates to the top global spot for growth.

For the region that stretches from Japan to Turkiye, the report pegged last year's GDP growth at 4.1 per cent, and projected it to dip to 3.5 per cent this year and pick up slightly to 3.8 per cent next year.

China's growth rate was 5 per cent last year, and the projections are 4.3 per cent this yead and 4.5 next year.

Pakistan recorded the weakest growth in South Asia, 3 per cent last year, with projections for 2.6 this year and 3.1 next year.

India's higher growth last year was "supported by robust consumption, especially from the rural economy along with goods and services tax rate cuts", the report said.

It was also helped by US importers front-loading imports from India in anticipation of the high tariffs, it said.

"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.

In the midst of all this, "the services sector remained a key growth driver", it said.

Hamza Malik, ESCAP's director of Macroeconomic Policy and Financing, said that despite adverse external factors, India has been able to maintain a growth momentum because of its productivity growth.

Speaking to reporters at the release of the report, he said: "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".

Another contributory factor is India's huge population, he said.

"They have a lot more absorptive capacity to absorb labour into productive areas", he said.

India's targeted fiscal support for the vulnerable population would also help India in facing the problems in the global scenario.

Maliks said that India had relatively more capacity compared to many other countries for providing fiscal support for the vulnerable population., which would increase their ability to spend more.

"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".

- IANS