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

NEW DELHI: 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 (60 per cent) or very strong (6 per cent) 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.

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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)