FX.co ★ World Bank Expects South Asia Growth to Slow to 6.3% in 2026

South Asia’s economic growth is projected to slow to 6.3% in 2026 from 7.0% in 2025, as the conflict in the Middle East and disruptions in global energy markets weigh on this import-dependent region, the World Bank said on Wednesday, according to Reuters.

In its latest South Asia Economic Update, the Bank forecasts that growth will rebound to 6.9% in 2027, with South Asia remaining the fastest-growing region among emerging market and developing economies. However, it cautioned that the outlook is highly uncertain, given the region’s heavy reliance on imported energy and its exposure to spillover effects from the Middle East conflict.

The World Bank warned that further disruptions in energy markets could push inflation higher, prompt additional monetary tightening, and undermine remittance flows.

India is expected to continue as the primary engine of regional growth, with output projected to expand by 7.6% in fiscal year 2025/26, before moderating to 6.6% in 2026/27. In October 2025, the Bank had previously forecast growth for the current financial year at 6.3%.