Mumbai: Global economic growth is expected to slow to 2.5 per cent in 2026 before picking up to just 2.8 per cent in 2027, with India also set to “lose a step” amid a broader moderation in activity, according to a Moody’s Analytics report.
In its latest Global Outlook: Running Hot, Running Cold, Moody’s Analytics said that the global economy is running at two different speeds. In some segments, growth is holding up better than expected, courtesy of the artificial intelligence boom which has driven a surge in data centre investment, exports in Asia’s tech-heavy economies, and stock market valuations across the world. But economies and industries less plugged into the AI boom have struggled.
Geopolitical upheaval and trade disruptions, from the Middle East conflict to friction between the US and its trading partners, have driven up prices and the cost of doing business.
“The result is a K-shaped world economy where some countries and industries race ahead while others fall behind. Growth will slow in 2026, but by less than we expected at the start of this year,” said the report.
The Analytics division within Moody’s attributed part of the slowdown to softer US growth, which will average 2 per cent in 2026 and 2027, well short of the 2.5 per cent US potential growth rate and the 3 per cent or so expansion in 2023 and 2024. Besides, China’s growth too will slow to 4.6 per cent in 2026 and 4.2 per cent in 2027.
While India is expected to remain among the world’s fastest-growing major economies, the report noted that “India will lose a step, too.” Euro zone GDP growth will slip to 0.8 per cent in 2026 before ticking up to 1.6 per cent in 2027,” said the report. Japanese growth will average less than 0.5 per cent across both years, as higher commodity prices, the fading AI boom, and trade friction add drag.
The report said the artificial intelligence investment cycle has emerged as the biggest counterweight to the global slowdown.
