IMF Raises India GDP Growth Forecast to 6.4% for FY26 and FY27

India’s growth outlook just received a moderate upgrade from the International Monetary Fund (IMF), which now projects a GDP rise of 6.4% for both FY26 and FY27. This revision, published in the IMF’s latest World Economic Outlook (WEO) report, reflects a slightly more positive global environment than anticipated in April’s forecast.

India's Forecast and Global Growth Trends

For the ongoing fiscal year, India’s growth projection has been increased by 20 basis points to 6.4%. The FY27 estimate has also been revised upward by 10 basis points to the same level. The IMF attributed this improvement to front-loaded global trade activity ahead of tariff hikes, improved financial conditions, lower effective tariff rates, and fiscal expansion in some large economies.

At a global level, growth is now expected to reach 3.0% in 2025 and 3.1% in 2026, both marginally higher than the April outlook. In emerging markets and developing economies, GDP growth is estimated at 4.1% in 2025 and 4.0% in 2026.

While global inflation is projected to decline to 4.2% in 2025 and 3.6% in 2026, the IMF noted that inflation in the United States is likely to remain above the central bank’s target. Meanwhile, other major economies may see more subdued price levels, pointing to a diverging inflation path globally.

IMF’s Caution on Risks and Trade Uncertainties

Despite the improved forecasts, the IMF flagged notable downside risks. “Risks to the outlook are tilted to the downside, as they were in the April 2025 WEO,” the report stated. “A rebound in effective tariff rates could lead to weaker growth. Elevated uncertainty could weigh more heavily on activity, particularly if deadlines for additional tariffs expire without progress on substantial, permanent agreements.”

It also warned that geopolitical tensions could disrupt global supply chains and push up commodity prices. “Additionally, larger fiscal deficits or growing risk aversion could push up long-term interest rates and tighten global financial conditions,” the IMF observed.

“Combined with fragmentation concerns, this could reignite volatility in financial markets,” the report added. On a more optimistic note, it suggested that “global growth could be lifted if trade negotiations lead to a more predictable framework and a reduction in tariffs.”

Also Read: Corporate India Plans Average Salary Hikes of 6.2% to 11.3% Across Industries in FY26!

Conclusion

The IMF’s upgraded forecast signals confidence in India’s growth resilience amid shifting global dynamics. While upside potential exists through improved trade relations, the outlook remains cautious in light of inflation, policy uncertainty, and geopolitical disruptions.

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