The World Bank revised its global GDP growth forecast for 2026 to 2.9%, slightly below its earlier estimate of 3.1%, citing persistent trade policy uncertainty, elevated interest rates in major economies and high debt levels constraining fiscal space in both developed and developing countries. The report projected that developing economies would continue to outperform advanced economies, with South Asia — led by India — growing at 6.5% as a region.
The World Bank highlighted several structural risks to the global outlook including climate change impacts on agricultural output, demographic pressures in ageing economies and the potential for financial instability if interest rates remain high for longer. It also noted that global debt has reached $315 trillion — a record 350% of global GDP — creating vulnerabilities across sovereign, corporate and household balance sheets worldwide.
On a positive note, the World Bank cited the rapid expansion of digital infrastructure, the energy transition investment boom and resilient emerging market growth as factors that could support higher long-term potential output. It specifically highlighted India's digital public infrastructure and PLI-led manufacturing revival as models worth emulating by other developing nations seeking to accelerate industrial development and inclusive economic growth.
