IMF Raises India's Economic Growth Forecast to 6.6% for FY26 Amid Strong Q1 Performance

Strategic Insights -

India's economic growth prospects have been boosted by a strong first quarter performance, with the International Monetary Fund (IMF) raising the country's growth forecast for the current fiscal year 2026 to 6.6% from 6.4% earlier. This upward revision is a result of the country's resilience to the impact of higher US tariffs on Indian goods. According to the IMF's latest World Economic Outlook (WEO), India's growth rate is expected to remain the highest among advanced economies, emerging markets, and developing countries in the current and next fiscal year.

Key Takeaways:

  • The IMF has raised India's economic growth forecast for FY26 to 6.6% from 6.4% earlier, citing strong first quarter growth that offset the impact of higher US tariffs.
  • India's growth rate is expected to remain the highest among advanced economies, emerging markets, and developing countries in the current and next fiscal year.
  • The IMF has lowered India's growth projection for FY27 to 6.2% from 6.4% estimated in July, attributing the change to the delayed impact of US tariffs.
  • India's gross domestic product (GDP) grew 6.5% in FY25 and surged to a five-quarter high of 7.8% in the April-June period.
  • The Reserve Bank of India (RBI) had also raised its FY26 GDP growth projection for India to 6.8% from 6.5% earlier.
  • The IMF has projected global growth at 3.2% this calendar year and 3.1% next year, a cumulative downgrade of 0.2 percentage points compared to its forecast a year ago.
  • Emerging market and developing economies are now projected to grow at 4.2% in 2025, slightly higher than 4.1% previously estimated.
  • China's growth outlook remained unchanged at 4.8% for 2025.
  • The IMF report also revised India's FY26 inflation forecast downwards to 2.8% compared to 4.2% estimated in April.

Statistics:

  • India's economic growth forecast for FY26 has been raised to 6.6% from 6.4% earlier.
  • India's growth rate is expected to remain the highest among advanced economies, emerging markets, and developing countries in the current and next fiscal year.
  • The IMF has lowered India's growth projection for FY27 to 6.2% from 6.4% estimated in July.
  • India's GDP growth rate in FY25 was 6.5%.
  • India's GDP growth rate in the April-June period was 7.8%.
  • The IMF has projected global growth at 3.2% this calendar year and 3.1% next year.
  • Emerging market and developing economies are now projected to grow at 4.2% in 2025.
  • China's growth outlook remains unchanged at 4.8% for 2025.

Sources:

  • International Monetary Fund (IMF), World Economic Outlook (WEO)
  • Reuters, "IMF raises India's economic growth forecast to 6.6% for 2026"
  • The Hindu BusinessLine, "IMF raises India's GDP growth forecast to 6.6% for 2026"
  • Livemint, "India's GDP growth forecast revised down to 6.2% for 2027 by IMF"