IMF Raises India’s FY26 Growth to 6.6% But Cautions Global Growth is 'Fragile'

The International Monetary Fund (IMF) has reportedly increased India’s growth projection for FY26 to 6.6%, up from 6.4% estimated in July 2025. The revision is mainly due to strong performance in the first quarter, which helped cushion the impact of higher US tariffs on Indian exports. For FY27, growth is expected to slow to 6.2% as the early momentum tapers off. The IMF said India’s growth continues to be led by the services sector.

Global Growth Outlook

Global growth remains under pressure, with the IMF projecting it at 3.2% in 2025, down from 3.3% in 2024. The 2026 estimate is unchanged at 3.1%. The fund said that even though trade tensions have eased slightly, the world economy is still fragile. From 2027 to 2030, growth is expected to average 3.2%, below the pre-pandemic level of 3.7%.

Trade Tensions and Tariffs

The IMF said the recent tariff increases have had a smaller impact on global trade than expected so far. However, it noted that risks remain as US tariffs continue to be high and trade disputes remain unresolved. The report added that US importers have absorbed most of the tariff costs, though some have started passing them on to consumers.

Regional Forecasts

Growth in advanced economies is projected at 1.6% for both 2025 and 2026. The US economy is expected to grow 1.9% in 2025 and 2% in 2026, while the Euro area is forecast to expand 1.2% and 1.1% respectively. Emerging markets and developing economies are expected to grow 4.2% in 2025 and 4% in 2026. China’s growth is likely to remain steady at 4.8% in 2025 and 4.2% in 2026.

Inflation and Commodity Prices

Global inflation is expected to ease to 4.2% in 2025 and 3.7% in 2026. Fuel prices are projected to fall 7.9% next year and 3.7% the year after.

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Conclusion

The IMF said India’s growth remains firm, but global recovery is still weak with risks from trade uncertainty, labour shortages, and financial pressures.

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