New Delhi [India], January 8 (ANI): Economic prospects in East and South Asian countries are projected to remain solid despite elevated policy uncertainty, rising trade barriers, and persistent debt vulnerabilities, according to the United Nations’ World Economic Situation and Prospects (WESP) 2026 report released on Thursday.
Growth in East Asia is forecast to moderate from 4.9 per cent in 2025 to 4.4 per cent in both 2026 and 2027. South Asia’s GDP is expected to expand by 5.6 per cent in 2026 and 5.9 per cent in 2027, following estimated growth of 5.9 per cent in 2025. Globally, output is projected to grow by 2.7 per cent in 2026, slightly below the 2.8 per cent estimated for 2025 and below the pre-pandemic average of 3.2 per cent.
The report noted that in 2025, resilience to sharp increases in US tariffs, along with strong consumer spending and easing inflation, supported growth. However, underlying weaknesses persist, including subdued investment and limited fiscal space, which could lead to a persistently slower global growth path than seen pre-pandemic.
“A combination of economic, geopolitical and technological tensions is reshaping the global landscape, generating new economic uncertainty and social vulnerabilities,” UN Secretary-General António Guterres said. “Many developing economies continue to struggle, and as a result, progress towards the Sustainable Development Goals remains distant for much of the world.”
In East Asia, growth is expected to moderate in the near term. During the first three quarters of 2025, front-loading of shipments ahead of US tariffs boosted exports, while private consumption was supported by steady labor markets and ongoing disinflation. Looking ahead, this temporary boost is expected to fade, but domestic demand is likely to remain resilient, supported by monetary and fiscal measures. Regional headline inflation is projected at 1.1 per cent in 2026, up from an estimated 0.5 per cent in 2025. China’s economy is projected to expand by 4.6 per cent in 2026 and 4.5 per cent in 2027, after estimated growth of 4.9 per cent in 2025, aided by easing trade tensions with the United States.
South Asia’s outlook remains robust, driven by strong private consumption and public investment. Inflation across the region declined markedly in 2025, with most economies recording rates at or below central bank targets. Average consumer price inflation is projected to rise slightly from 8.3 per cent in 2025 to 8.7 per cent in 2026, ranging from 3.2 per cent in Nepal and 4.1 per cent in India to 35.4 per cent in Iran.
In India, growth is projected to moderate from an estimated 7.4 per cent in 2025 to 6.6 per cent in 2026. Resilient household spending, strong public investment, and lower interest rates are expected to underpin economic activity. While higher US tariffs may affect select products, strong demand from other major markets is likely to offset some impact.
Downside risks remain, including trade policy uncertainty, slowdowns in major economies such as China, the EU, and the US, and fragile fiscal positions limiting countercyclical support. Most central banks across East and South Asia eased monetary policy in 2025 as inflation declined, with further easing expected in 2026, though approaches will vary by country.
The UN report highlights that navigating trade realignments, persistent price pressures, and climate-related shocks will require deeper global coordination and decisive collective action at a time when geopolitical tensions are rising, policies are becoming inward-looking, and multilateral cooperation is weakening. Sustained progress will depend on rebuilding trust, strengthening predictability, and reaffirming commitment to an open, rules-based multilateral trading system.
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