India to Anchor South Asia as World’s Fastest-Growing Region in 2026: WEF Chief Economists Outlook
NEW DELHI: India is set to continue anchoring South Asia as the world’s brightest growth region in 2026, even as a majority of global economists brace for weaker economic conditions, according to the latest Chief Economists Outlook released by the World Economic Forum (WEF) on Friday.
The survey, published ahead of the annual WEF meeting in Davos next week, highlights a cautiously improving global sentiment compared to late 2025, but warns that uncertainty remains elevated. Economists cited concerns ranging from high asset valuations and rising global debt to geo-economic realignments and the rapid deployment of artificial intelligence across industries, PTI reported.
According to the report, 53 per cent of chief economists surveyed expect global economic conditions to weaken in 2026, a notable improvement from 72 per cent in September 2025. Despite this global caution, South Asia has emerged as the strongest regional growth performer, with India playing a central and stabilising role.
“South Asia remains the brightest growth spot among emerging regions, with India anchoring the outlook despite mounting trade headwinds,” the report noted.
South Asia’s Growth Outlook Strengthens Sharply
The survey revealed a sharp shift in sentiment towards South Asia. Nearly two-thirds of respondents now expect strong (60 per cent) or very strong (6 per cent) growth in the region, up from just 31 per cent in the previous edition of the outlook.
India’s economic resilience was highlighted despite challenges such as US tariffs on Indian exports. The WEF cited the Reserve Bank of India’s recent ‘goldilocks’ assessment, pointing to 8.2 per cent year-on-year real GDP growth in the September quarter, coupled with near-zero inflation.
These indicators, economists said, reflect a rare balance between growth and price stability at a time when many major economies continue to grapple with inflationary pressures and slowing output.
Reforms and AI Adoption Boost Confidence
India’s reform momentum also featured prominently in the report. Economists noted progress in easing employment restrictions and a sharp acceleration in artificial intelligence adoption, supported by rising investments from major 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,” the WEF said. This optimism around AI-led growth places India among economies expected to benefit meaningfully from technological transformation, particularly in information technology, services, and emerging digital infrastructure.
At a broader level, the IT sector is expected to lead AI adoption globally, with financial services, supply chains, healthcare, engineering, and retail identified as fast-following sectors.
Inflation and Policy Outlook Remain Stable
The report also pointed to improving macroeconomic stability in South Asia. Inflation expectations across the region have moderated, providing policymakers with more room to maintain supportive stances.
More than two-thirds of economists surveyed expect monetary policy to remain unchanged in South Asia over the coming year, while 85 per cent do not anticipate major shifts in fiscal policy. This relative stability contrasts sharply with the policy uncertainty facing several advanced economies.
Global Risks Still Loom Large
At the global level, WEF Managing Director Saadia Zahidi identified three defining trends shaping the outlook for 2026. These include accelerating AI investment, global debt levels approaching critical thresholds that may require unprecedented fiscal and monetary adjustments, and continued trade realignments.
“Governments and companies will have to navigate an uncertain near-term environment with agility while continuing to build resilience and invest in the long-term fundamentals of growth,” Zahidi said.
Despite modest improvements in sentiment, economists remain wary of financial market risks. The survey showed caution around cryptocurrencies, with 62 per cent of respondents expecting further declines following recent volatility. Meanwhile, nearly 54 per cent believe that gold may have peaked after its recent rally.
Diverging Regional Growth Paths
The outlook highlighted sharp regional divergences in growth expectations. South Asia topped the rankings, with 66 per cent of economists anticipating strong or very strong performance. East Asia and the Pacific followed, with 45 per cent expecting strong growth.
The United States outlook improved compared to earlier surveys, with 69 per cent of respondents forecasting moderate growth in 2026. However, Europe remained the weakest region, with 53 per cent of economists expecting weak growth amid persistent structural challenges and policy constraints.
China’s outlook remained mixed. Economists were split across expectations of moderate, strong, and weak growth, reflecting uncertainty around domestic demand, property sector stress, and geopolitical tensions.
AI and Employment: Short-Term Pain, Long-Term Debate
On employment, the survey reflected cautious optimism tempered by concern. Around two-thirds of respondents expect modest job losses from AI adoption over the next two years. Over a longer horizon, views diverged sharply: 57 per cent foresee net job losses over the next decade, while 32 per cent expect job gains as new roles and industries emerge.
Expectations of AI-led productivity gains were strongest in the US and China, where nearly four-fifths of economists anticipate improvements within two years. For emerging economies like India, the impact is expected to be significant but uneven, depending on skilling, policy support, and investment flows.
Our Thoughts from TheTrendingPeople.com
The WEF’s latest outlook reinforces India’s position as a rare bright spot in a clouded global economy. While much of the world prepares for slower growth, India’s combination of macroeconomic stability, reform momentum, and rapid AI adoption is helping anchor South Asia’s optimism. However, sustaining this edge will require careful navigation of global trade tensions, employment disruptions from AI, and rising debt risks worldwide. For policymakers and investors alike, the message is clear: India’s growth story remains compelling, but it will need constant recalibration in an increasingly fragmented global landscape.