Best of BS Opinion: Global growth upgrades mask deeper economic fault lines

Here are the best of Business Standard's opinion pieces for today

The IMF’s January 2026 World Economic Outlook strikes an optimistic note on global growth, revising the forecast for 2026 up to 3.3 per cent, largely on the back of artificial intelligence-led investment. This momentum has helped offset weak global trade, but the IMF and the UN both flag a narrow base of growth, with over 70 per cent of global corporate AI spending concentrated in the US, highlights our first editorial. The risks range from overvaluation and energy constraints to labour displacement, and for economies like India, the concern is exposure to a sharp reversal in global financial sentiment. 

A more domestic lens comes from Niti Aayog’s Export Preparedness Index 2024, which shifts attention from export volumes to the conditions that enable states to compete globally. Gujarat, Maharashtra and Tamil Nadu still dominate, accounting for over half of India’s exports, reflecting long-term investments in ports, industrial corridors and governance capacity, notes our second editorial. Yet large parts of eastern India and the North-East remain marginal to global trade, constrained by logistics, weak MSME ecosystems and regulatory gaps, reinforcing how uneven export participation remains at the district level. 

 

Meanwhile, drawing on the work of economic historian Joel Mokyr, Naushad Forbes argues that long-run prosperity depends less on breakthrough discoveries and more on the steady accumulation of practical knowledge, supported by institutions and culture. Europe’s fragmented political structure, he notes, allowed ideas and innovators to move freely, encouraging experimentation and competition. Applying this to India’s 2047 development goal, he stresses the need to deepen manufacturing skills, invest in education and accept creative destruction.  

Rajesh Kumar maps out five economic debates likely to dominate 2026, beginning with trade. An India-EU agreement could be significant, while uncertainty around a US deal remains a drag. Fiscal policy will also be in focus as attention shifts to debt sustainability, alongside major revisions to GDP and inflation data that could alter policy assumptions. Added to this are concerns over US Federal Reserve independence and the possibility that AI investment turns from a boom into a destabilising correction. 

Finally, Gunjan Singh reviews Eclipsing the West by Vince Cable, a book that examines the rise of China and India against a backdrop of weakening Western leadership. He argues that both countries share features of state capitalism and face domestic economic constraints, even as global institutions lose authority. While China and India carry growing responsibility for global public goods, deep strategic mistrust means rivalry, rather than partnership, is likely to define their relationship. 

Stay tuned!