NewKerala.com

Key Points

India is set to remain the world's fastest-growing economy in 2025 and 2026, according to Morgan Stanley. The report predicts a global slowdown, with growth dropping to 2.5% due to trade shocks. While the US and Eurozone face stagnation, India's strong domestic demand keeps growth robust. Morgan Stanley maintains an overweight stance on India, Singapore, and UAE due to reform momentum.

Key Points: India to Lead Global Growth in 2025-26 as Morgan Stanley Predicts Slowdown

  • India's GDP to grow at 5.9% in 2025 and 6.4% in 2026
  • Global growth to drop from 3.5% to 2.5% in 2025
  • US and Eurozone growth to stagnate below 1%
  • China's slowdown expected at 4% due to trade tariffs
2 min read

India to remain fastest growing economy in 2025 & 2026, while global growth to decline: Morgan Stanley

Morgan Stanley forecasts India as the fastest-growing economy at 6.4% in 2026 while global growth declines to 2.5% amid trade shocks.

"India remains the fastest growing economy in our coverage, with real GDP growth at 5.9% in 2025 and 6.4% in 2026. – Morgan Stanley"

New Delhi, July 1

India is expected to remain the fastest-growing economy among all the countries covered by global investment firm Morgan Stanley, according to the latest report from its Global Investment Committee (GIC).

The report forecasts India's real GDP growth at 5.9 per cent on a Q4-over-Q4 basis in 2025 and 6.4 per cent in 2026.

It stated, "India remains the fastest growing economy in our coverage, with real GDP growth at 5.9 per cent, Q4/Q4 in 2025 and 6.4 per cent in 2026."

The Global Investment Committee is a group of experienced investment professionals from Morgan Stanley & Co. and Morgan Stanley Wealth Management. They meet regularly to assess developments in the global economy and financial markets.

In its baseline outlook, the committee expects global economic growth to slow down significantly. Global real GDP growth is projected to decline from 3.5 per cent in 2024 to 2.5 per cent in 2025.

The report noted that a trade shock is likely to affect multiple economies at the same time, pushing most of them below their potential growth levels.

It stated, "We anticipate global growth stepping down by a percentage point in 2025 from 2024, with US trade policy and the uncertainty it engenders serving as the main drivers."

In the United States, Morgan Stanley expects real GDP growth to fall from 2.5 per cent in 2024 to just 1.0 per cent in both 2025 and 2026. Similarly, in the eurozone, growth is not expected to rise above 1 per cent annually during the forecast period, due to weaker private consumption and exports.

China's economy is also expected to slow down, with tariffs contributing to a reduction of about 0.5 percentage points in real growth in 2025 compared to 2024.

The report forecasts China's real GDP growth at 4.0 per cent in 2025 and 4.2 per cent in 2026, with deflation remaining a concern. In Japan, the global trade shock is likely to affect exports, but consumer spending is expected to stay strong, helping nominal GDP continue to grow.

Despite global challenges, the report sees some positive momentum across Asia Pacific and emerging markets through mid-2026. It maintains an overweight stance on India, Singapore, and the United Arab Emirates (UAE), driven by ongoing reforms and strong domestic growth trends.

As per the report, while Indian equities are considered expensive when compared to historical levels but the strong domestic retail and institutional investment flows will support high valuations.

- ANI

Share this article:

Reader Comments

S
Sarah B
While the numbers look impressive, I wonder how much of this growth actually reaches the common man? We need to ensure the benefits percolate to all sections of society, not just the urban elite.
A
Ananya R
Make in India and Digital India initiatives are game changers! 🚀 Our startup ecosystem is booming too. But we must focus on skill development to sustain this growth long-term. #ProudIndian
V
Vikram M
Good news but inflation is still pinching our pockets. GDP growth numbers don't mean much if vegetables and fuel prices keep rising. Government should focus on controlling prices for common people.
K
Karthik V
The world is recognizing India's potential finally! Our demographic dividend, English-speaking workforce and digital infrastructure give us an edge. Time to attract more foreign investments.
P
Priya S
Hope this growth leads to better healthcare and education facilities in rural areas too. Development should be inclusive - cities are developing fast but villages need equal attention.

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Leave a Comment

Minimum 50 characters 0/50