Jan 29:Despite significantly higher-than-expected US import tariffs, the Indian economy has demonstrated remarkable resilience, expanding 8.2% year-on-year in the July–September quarter, supported by strong consumer spending, according to ACCA’s latest Global Economic Outlook.
In contrast, the global economy is expected to grow at a steady but unspectacular pace in 2026, aided by easier monetary policy, fiscal stimulus in key economies, and the continued artificial intelligence (AI) boom. However, the outlook remains clouded by downside risks amid a volatile and unpredictable global environment.
India is set to benefit further from robust consumer demand, low inflation, GST cuts, monetary easing, and strong government-led infrastructure investment, while the services sector is expected to remain a key growth driver, supported in part by exports. Recent labour market and bankruptcy law reforms could enhance the economy’s longer-term performance. A potential trade agreement with the US and continued low global oil prices would provide additional upside, while domestic food price movements remain a key risk to monitor.
Md. Sajid Khan, Director – India at ACCA, said:
“It’s extremely encouraging to see the Indian economy remain resilient despite the sharp increase in US import tariffs, supported by strong consumer spending. Our report indicates that India is likely to remain the world’s fastest-growing major economy in 2026, with recent reforms offering the potential to strengthen its long-term performance.”
The third edition of ACCA’s annual outlook finds that global growth in 2025 was stronger than expected despite major trade disruptions and policy uncertainty. This resilience is expected to carry into 2026, with global GDP projected to expand by around 3%, broadly in line with last year, although risks remain tilted to the downside.
Former IMF Chief Economist Ken Rogoff, interviewed for the report, described the global economy as “solid but not exciting,” while warning that current financial markets may not fully reflect the scale of uncertainty. He cautioned about the risk of a significant stock market correction over the next three years, even as markets may rise further in the near term.
“Populist policies work until they don’t,” Rogoff noted, warning of potential negative consequences for the US economy emerging in 2027 and 2028.
Jonathan Ashworth, Chief Economist at ACCA and author of the report, said:
“Under a central scenario, the global economy should continue to expand steadily in 2026, supported by looser monetary policy, fiscal easing, and the ongoing AI boom. The US is likely to be the fastest-growing G7 economy, but this remains a fragile backdrop amid heightened geopolitical uncertainty, renewed trade tensions, and concerns over threats to the Federal Reserve’s independence.”
The report highlights three key themes likely to shape the global economic outlook in 2026:
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Developments in AI: Evidence that AI investment is boosting productivity could ease concerns of an AI-led market bubble; failure to deliver such gains may heighten correction risks.
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Advanced economy bond markets: A sharp rise in government bond yields could strain economies and raise debt-servicing costs, driven by debt sustainability concerns, political instability, or monetary tightening in Japan.
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Global trade dynamics: The ongoing impact of higher US tariffs and the risk of renewed trade tensions warrant close monitoring.
Business leaders contributing to the report also highlighted AI adoption, geopolitics, trade, the green transition, and cybersecurity as defining issues for 2026.
Ashworth added:
“In an increasingly volatile and rapidly changing world, understanding the interaction between economic, geopolitical, political, and technological forces will be critical for businesses and policymakers alike.”
The 2026 Global Economic Outlook offers in-depth analysis and strategic insights for finance leaders navigating an uncertain global landscape. The full report is available for download.