India acts as world's economic buffer and growth engine: Report

New Delhi: Against a backdrop of the global economy leaning on a few nations to drive output, India has emerged as a major contributor to global growth and is expected to remain the world's fastest-growing major economy through 2027, a new report has said, highlighting the 2026 World Economic Outlook, unveiled at the IMF-World Bank Annual Meetings that concluded recently.

India is currently the world’s economic buffer and remains the engine that keeps "global machinery moving, masking the fact that the traditional powerhouse economies in the West are currently slowing down and getting weaker," the report from South Africa-based IOL said.

The International Monetary Fund (IMF) projected 7 per cent growth for India in both 2026 and 2027, while global growth was forecast at 3.1 per cent in 2026 and 3.4 per cent in 2027, with a relatively small group of economies accounting for the majority of global expansion.

India's growth is supported by strong domestic demand, a large consumer market, a robust services sector and favourable demographics, it said.

“If India’s economy were to suddenly cool down or flatline, the global economy would face severe consequences as India accounts for roughly 15 per cent to 17 per cent of total global growth,” the report said.

“Without India, the projected global growth of 3.1 per cent would likely plummet toward 2.5 per cent, a threshold the IMF historically considers a global recession,” it added.

Further, with the US coasting at a modest 2.3 per cent growth and Europe’s growth nearly flat at 1.1 per cent, Western engines cannot pick up the global economy and the world would slip into an era of structural low growth.

The IMF also identified India as an exception among major economies in that it does not require fiscal consolidation beyond current plans to stabilise its debt ratio, despite elevated energy prices that continue to weigh on many importing nations.

The report also highlighted India's economic resilience relative to China, whose growth forecast has been lowered to 4.5 per cent for 2026 amid structural economic transitions and a shrinking export footprint.

ABOUT THE AUTHOR

IANS

[email protected]