OECD Economic Outlook 2025: Understanding India’s Economic Projections

OECD Economic Outlook Report 2025: Key Highlights

In December 2025, the Organisation for Economic Cooperation and Development (OECD) released its latest bi-annual report titled “OECD Economic Outlook, Volume 2025 Issue 2: Resilient Growth but with Increasing Fragilities.” This report, prepared by the OECD Economics Department, provides vital insights into global economic trends.

India’s GDP Forecast for FY26

The OECD maintained its forecast for India’s Gross Domestic Product (GDP) for the Financial Year 2025-26 (FY26) at 6.7%. The report emphasizes that while higher tariffs imposed by the United States of America (USA) may negatively impact exports and investments, private consumption in India is expected to be bolstered by several factors.

Factors Supporting Private Consumption

Key factors contributing to the anticipated growth in private consumption include:

• Rising real incomes
• Easing of monetary policy
• Robust public capital expenditure

India’s Inflation and Future GDP Projections

Additionally, the OECD forecasts India’s inflation rate to decrease significantly. The projections are as follows:

• Inflation for FY26: 1.9%
• Inflation for FY27: 3.4%

These inflation figures align closely with the Reserve Bank of India’s (RBI) target range of 4%. Notably, retail inflation fell to a record-low of 0.25% in October 2025, influenced by lower food prices and a favorable base effect.

Global Growth Rate Insights

The report also presents a broader picture of global economic growth, with predictions for the global growth rate as follows:

• CY25: 3.2%
• CY26: 2.9%
• CY27: 3.1%

Conclusion

In summary, the OECD Economic Outlook highlights both challenges and opportunities for India’s economy. With a projected GDP growth of 6.7% for FY26, the emphasis on private consumption and manageable inflation rates offers a resilient economic landscape for the upcoming years.

Frequently Asked Questions (FAQs)

Q1. What is the GDP forecast for India in FY26 according to the OECD report?
Answer: The OECD forecasts India’s GDP growth at 6.7% for the Financial Year 2025-26 (FY26), indicating a stable economic outlook amidst global challenges.

Q2. What is the expected inflation rate for India in FY26?
Answer: The OECD projects India’s inflation rate to decline to 1.9% for FY26, aligning closely with the Reserve Bank of India's target range.

Q3. How do global growth projections compare in the OECD report?
Answer: The OECD predicts global growth rates of 3.2% for CY25, 2.9% for CY26, and 3.1% for CY27, reflecting a cautious global economic outlook.

Q4. What factors are driving private consumption in India according to the report?
Answer: Private consumption in India is expected to rise due to increasing real incomes, easing monetary policy, and strong public capital expenditure.

Q5. What was the retail inflation rate in October 2025?
Answer: Retail inflation in India dropped to a record-low of 0.25% in October 2025, primarily due to lower food prices and a favorable base effect.

UPSC Practice MCQs

Question 1: What is the OECD's GDP growth forecast for India in FY26?
A) 6.2%
B) 6.4%
C) 6.7%
D) 7.0%
Correct Answer: C

Question 2: What is the projected inflation rate for India in FY27 according to the OECD?
A) 2.5%
B) 3.0%
C) 3.4%
D) 4.0%
Correct Answer: C

Question 3: In which month did India’s retail inflation reach a record low in 2025?
A) September
B) October
C) November
D) December
Correct Answer: B

Question 4: What is the OECD's global growth rate forecast for CY25?
A) 2.5%
B) 3.0%
C) 3.2%
D) 3.5%
Correct Answer: C

Question 5: Which factor is NOT mentioned as supporting private consumption in India?
A) Rising real incomes
B) Easing monetary policy
C) Decreasing exports
D) Public capital expenditure
Correct Answer: C