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South Asia Tops Growth Charts, India Shines as AI and Reforms Fuel Economy

The World Economic Forum's latest survey of chief economists places South Asia at the top of the regional growth outlook, with a significant majority expecting strong expansion. India is the anchor of this positive outlook, having posted 8.2% year-on-year real GDP growth alongside near-zero inflation, a condition described by the RBI Governor as a "goldilocks" period. The report highlights India's continued reform pathway and a surge in AI adoption, buoyed by investments from US technology firms. While global economic sentiment remains cautious, expectations for inflation in South Asia have improved, with most foreseeing only moderate price rises.

Key Points: South Asia Leads Emerging Market Growth, India Anchors Outlook: WEF

  • South Asia leads emerging market growth
  • India anchors outlook with 8.2% GDP growth
  • AI adoption and US tech investments surging
  • Inflation expectations for region have lowered
2 min read

South Asia leads emerging market growth, India anchors despite trade headwinds: WEF

WEF survey finds South Asia is the top growth region. India's "goldilocks" economy, AI adoption, and reforms drive optimism despite trade challenges.

"rare goldilocks period - RBI Governor Sanjay Malhotra"

New Delhi, January 17

South Asia returns to the top of the regional growth outlook, according to two-thirds of the World Economic Forum's chief economists who were surveyed. They expect strong or very strong growth, a substantial improvement compared to 31 per cent in the September edition.

According to Chief Economists' Outlook: January 2026, South Asia remains the brightest growth spot among emerging regions, with India anchoring the outlook despite mounting trade headwinds.

Despite US tariffs on Indian exports, the Indian Reserve Bank's recent assessment of a "goldilocks" economy reflected a surge of 8.2 per cent year-on-year real GDP growth in the September quarter alongside near-zero inflation.

RBI Governor Sanjay Malhotra had in December characterised India's current macroeconomic moment as a "rare goldilocks period", that currently marks high economic growth and exceptionally low inflation.

According to the WEF survey, India is continuing on its reform pathway by reducing restrictions for employment, and AI adoption is surging alongside investments from US technology firms.

Over one-third of respondents (36 per cent) anticipate a significant positive impact of AI investments on growth over the next two years.

Inflation expectations for South Asia have lowered, with 69 per cent expecting moderate inflation in the year ahead (up from 64 per cent in September 2025) and 28 per cent expecting low inflation (up from 18 per cent).

The share of respondents expecting high inflation dropped from 18 per cent to 3 per cent.

Over two-thirds of respondents (68 per cent) expect monetary policy to remain unchanged, and 85 per cent of respondents (up from 80 per cent in September 2025) do not anticipate major changes to fiscal policy in the year ahead in the region.

Overall, 53 per cent of chief economists expect global economic conditions to weaken, with 28 per cent expecting no change and 19 per cent expecting a stronger economy. The prospects for the global economy tilt towards the negative in the year ahead, albeit with improved sentiment compared to last year's outlook, they said.

The 56th Annual Meeting of the World Economic Forum convenes the foremost leaders from government, business and civil society from 19-23 January 2026.

Under the theme, 'A Spirit of Dialogue', Davos 2026 provides an impartial platform to connect leaders to confront shared challenges and drive innovations defining the future.

For more than five decades, the Forum has convened leaders from business, government, civil society, international organizations, academia and the next generation to make sense of global challenges and to move the world forward together.

- ANI

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Reader Comments

R
Rohit P
Great to see the positive outlook, but I'm a bit skeptical. The article mentions "mounting trade headwinds" and US tariffs. How sustainable is this growth if our exports face barriers? We need to focus more on boosting domestic consumption and reducing dependency on foreign markets.
A
Aditya G
The surge in AI adoption and investments from US tech firms is the real story here. This is where the future lies. If we play our cards right, India can become a global AI hub. The government must continue reforms in education to build the required skilled workforce.
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Sarah B
Interesting read. As someone working in the tech sector in Bangalore, I can confirm the AI boom is real. The campus hiring and project inflows have increased noticeably. However, the benefits need to percolate beyond the metros to smaller cities for truly inclusive growth.
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Karthik V
The inflation numbers are very reassuring. For the common man, controlling price rise is as important as GDP growth. If RBI can maintain this balance, it will be a huge relief for household budgets. Let's hope the "goldilocks" period lasts!
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Michael C
While the headline is positive, the last paragraph is crucial. 53% of economists expect *global* conditions to weaken. India's growth is impressive, but we are not an island. A global slowdown will eventually impact us. We should prepare for that contingency.

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