IMF Lifts India’s 2025 Growth Forecast To 7.3% Amid Easing Tariff Impact

The International Monetary Fund has revised India’s economic growth projection for 2025 to 7.3%, up by 0.7 percentage point from its earlier estimate. The revision was published in the latest World Economic Outlook update. 

The Fund attributed the change to stronger activity toward the end of the current financial year, particularly during the fourth quarter, after output and demand held up better than expected. 

Outlook Beyond 2025 

Growth is projected to slow to 6.4% in 2026 and 2027, the IMF said. The moderation shows the gradual fading of short-term factors that supported recent expansion. 

Despite this easing, India is expected to remain among the larger contributors to growth within the emerging market and developing economy group over the medium term. 

Corporate Performance and Markets 

The upward revision follows a challenging period last year, when slower corporate earnings growth weighed on equity markets and led to foreign portfolio outflows.  

Investor sentiment was also affected by global trade tensions, high market valuations and concerns over export demand after US tariff measures. 

More recent data show an improvement in corporate earnings, particularly in the later quarters, which the IMF cited as one of the factors supporting the revised outlook. 

Global Growth Picture 

At the global level, the IMF said the economy has moved past the immediate impact of tariff disruptions. Global growth is projected at 3.3% in 2026, supported by easing trade tensions, accommodative financial conditions and higher investment. 

The Fund raised its near-term global growth estimate by 0.2 percentage point, with the United States and China accounting for most of the upward revision. 

Technology Investment and Inflation 

The IMF noted that IT investment in the US has risen to its highest share of economic output since 2001, contributing to business investment and spillover effects, particularly for Asian technology exports. 

For India, inflation is expected to move closer to target levels after a marked decline in 2025, mainly due to lower food price pressures, which could support domestic demand. 

Read More: US Senators’ Letter on Pulse Tariffs Adds New Strain to India–US Trade Negotiations! 

Conclusion  

The report flagged risks linked to artificial intelligence-related investment cycles, high asset valuations and tighter global financial conditions. It also noted that renewed trade, fiscal or geopolitical tensions could add to uncertainty and affect growth prospects. 

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