Context:

• The Organisation for Economic Co-operation and Development (OECD) has released its “Interim Economic Outlook” report, according to which India will remain the fastest-growing major economy in the world.

India’s Growth Forecast:

• 2025–26 (FY26): 7.6% (due to strong domestic demand and investment)
• 2026–27 (FY27): 6.1% (expected slowdown due to global uncertainties and reduction in fiscal support)
• 2027–28 (FY28): 6.4% (expected stabilization with slight recovery)

Global Challenges and Economic Impact:

• Rising geopolitical tensions, especially in the Middle East, have been highlighted as a major risk to the global economy.
• Disruptions in the Strait of Hormuz and damage to energy infrastructure have led to a sharp increase in energy prices.
• These developments have affected the global supply of key commodities such as energy and fertilizers, resulting in:
  • Increased costs
  • Reduced demand
  • Rising inflationary pressures
• The evolving situation is creating uncertainty regarding global economic performance.

Global and China Growth Trends:

• Globally, GDP growth is projected to remain stable at 2.9% in 2026, and then slightly increase to 3.0% in 2027.
• This growth is expected to be supported by:
  • Increased investment in technology
  • Gradual easing of tariff-related pressures
• China’s Growth Rate:
  • 2025: 5.0%
  • 2026: 4.4%
  • 2027: 4.3%
• Reasons for slowdown:
  • Withdrawal of government subsidies for consumers
  • Rising energy import prices
  • Ongoing adjustments in the real estate sector
  • Weak investment growth despite anti-slowdown measures

About OECD:

• The OECD is an intergovernmental economic organization of 38 developed countries.
• Established: 14 December 1960 (came into operation in 1961)
• Predecessor: Replaced the Organisation for European Economic Co-operation (OEEC) established in 1948
• Headquarters: Paris, France (Château de la Muette)
• Membership: 38 democratic countries (mainly high-income economies)

India and OECD:

• India is not a member of OECD but has been a key partner since 2007.
• India is also a member of the OECD Development Centre.

Latest Member:

• Costa Rica became the 38th member on 25 May 2021.