IMF Revises India’s Growth Forecast Amid Strong Economic Momentum

The IMF raised India’s 2025-26 growth forecast to 6.6%, citing strong domestic performance offsetting U.S. tariff impacts. India’s GDP grew 7.8% in April-June, driven by private consumption, keeping it the fastest-growing major economy. However, the 2026-27 forecast was lowered to 6.2%. The IMF warned of global growth moderation and challenges from trade policy uncertainties, but India’s resilience remains a standout amid fragile global economic conditions.

The International Monetary Fund (IMF) has revised its growth outlook for India, raising its projection for the 2025-26 fiscal year by 0.2 percentage points to 6.6%. This adjustment reflects the country's robust economic performance, which has been able to counterbalance the challenges posed by elevated U.S. tariffs on Indian exports.

India’s GDP recorded an impressive 7.8% growth in the April-June quarter, driven by vigorous private consumption. This growth has helped India maintain its position as the fastest-growing major economy globally, even as its export sector faces headwinds due to the implementation of steep 50% tariffs by the U.S., under the administration of President Donald Trump.

The IMF’s latest World Economic Outlook report attributes the upward revision to a strong start in the fiscal year, which more than compensates for the dampening effects of the increased U.S. tariff rates on Indian imports since July. For context, India’s financial year spans from April to March.

However, the IMF has tempered its expectations for India’s growth in the following fiscal year, lowering its estimate by 0.2 percentage points to 6.2%. This downward adjustment was highlighted in the report released from Washington, D.C.

The IMF’s upgraded projection comes shortly after the World Bank also raised its growth forecast for India’s 2025-26 fiscal year to 6.5%, up from a previous estimate of 6.3%. At the same time, the World Bank trimmed its growth outlook for the subsequent fiscal year by 0.2 percentage points, citing the impact of U.S. tariffs as a significant factor.

Globally, the IMF anticipates growth in emerging markets and developing economies to soften, projecting a decline from 4.3% in 2024 to 4.2% in 2025, and further to 4% in 2026. The report highlights that, while some emerging economies—such as India—have demonstrated resilience due to unique domestic factors, the overall outlook remains fragile.

The IMF also noted that heightened U.S. tariffs are dampening external demand, while growing uncertainty surrounding trade policies is discouraging investment, particularly within export-dependent economies.

In summary, India’s strong domestic performance continues to shine as a beacon of resilience amid global economic uncertainties. However, challenges such as trade barriers and reduced external demand will require careful navigation to sustain long-term growth.