December 30, 2025
The report says economies with large internal markets and reform momentum, such as India, are better placed to navigate global volatility
Moderating inflation is expected to support policy stability, real income growth and sustained consumption in India
Structural reforms are improving productivity, formalisation and earnings visibility while reducing macroeconomic risks
Financials, industrials, technology, manufacturing and infrastructure are highlighted as key sectors driving India’s growth outlook
India continues to stand out as one of the most resilient growth stories among major economies, supported by strong domestic demand, moderating inflation and leadership across key sectors, according to UBS’s latest Year Ahead outlook. The report underscores that emerging economies anchored in domestic growth drivers are better positioned to navigate global volatility, with India emerging as a clear beneficiary of this trend.
UBS points out that economies with large domestic markets and sustained momentum on structural reforms are likely to outperform over the medium term, placing India firmly in this category. On growth, the report emphasises that consumption-led economies with improving investment cycles are expected to deliver relatively higher growth even as external headwinds persist. India’s expanding middle class and steady investment momentum continue to underpin this outlook.
Inflation dynamics are also becoming more favourable. UBS notes that inflation has moderated meaningfully from recent peaks across several emerging markets, creating room for greater policy stability. Easing price pressures, the report adds, are expected to support real income growth and consumption, reinforcing India’s macroeconomic stability.
India’s policy framework and reform trajectory remain central to its long-term prospects. UBS reports that structural reforms implemented in recent years are improving productivity and formalisation, thereby strengthening underlying economic fundamentals. These reforms are seen as enhancing earnings visibility while reducing broader macroeconomic vulnerabilities.
From a sectoral perspective, UBS highlights financials, industrials and technology-linked sectors as key beneficiaries of domestic capital expenditure and digitalisation. Banks in economies with strong credit growth and improving asset quality are viewed as well-positioned, a trend that aligns closely with India’s evolving financial sector. Manufacturing and infrastructure-linked segments also remain in focus, with ongoing investment and supply-chain diversification creating multi-year opportunities and strengthening India’s role in global supply-chain realignment.
On markets, UBS reiterates confidence in India’s equity story. The report states that equity markets supported by earnings growth and strong domestic participation tend to be better insulated from global shocks, whereas economies driven more by internal demand than by external financing are less exposed to tighter global financial conditions. Taken together, UBS concludes that India’s structural growth story remains intact despite near-term global risks, reinforcing its appeal as a long-term investment destination among major emerging economies.
Source: Economic Times