New Delhi, Nov 11 India, at its current rate of growth, is likely to emerge as the world's third-largest consumer market in 2026 and third-largest economy by 2028 -- next only to the US and China, according to a UBS report.
“India's household consumption nearly doubled in the past decade to $2.4 trillion in 2024, recording a 7.9 per cent CAGR, stronger than China, the US and Germany. Our estimates indicate India's consumer market is on track to become the world's third largest in 2026, well before its GDP does by 2028,” according to the UBS report.
India’s real GDP growth is likely to stabilise at 6.4 per cent year-on year in FY27 and 6.5 per cent in FY28, on supportive policy and strong domestic demand, making it the fastest growing economy in the Asia Pacific (APAC) region in 2027, followed by Philippines (GDP growth at 6.1 per cent) and Indonesia at 5.1 per cent, the report states.
The report further says that GDP growth in the case of the US is expected to slow from 1.9 per cent in 2025 to 1.7 per cent in 2026 and recover to 1.9 per cent in 2027. Real GDP growth in China, is likely to slow to 4.5 per cent in 2026 (from 4.9 per cent in 2025), as the Asian giant’s exports are expected to take a hit.
UBS' growth forecast for India is, however, subject to a downside risk due to uncertainty related to US trade policy and India's policy response.
Firstly, in case the Donald Trump administration’s 50 per cent trade tariff persists, it could pull down growth by around 50 basis points in FY27 and there would be a knock-on impact on employment, consumption and business confidence, with a further drag on investment.
Secondly, a 25 per cent tax on payments made by US companies to foreign outsourcing services, could lower India's growth by a significant around 90bps in FY27, the report states.
UBS also expects the Reserve Bank of India (RBI) to cut rates by another 25 basis points to spur growth during the current financial year ending on March 31, 2026.
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