IMF Edges Up India's GDP Growth Forecast, Warns of Trade War Risks

Strategic Insights -

India's economic growth story is expected to surpass earlier estimates, with the International Monetary Fund (IMF) projecting a 6.6% GDP growth rate for 2025-26, up 0.2 percentage points from the previous forecast. The upward revision is attributed to a strong first quarter, which offset the impact of increased US tariffs on Indian imports since July. However, the IMF warns that a renewed US-China trade war could significantly slow global output.

Key Takeaways:

  • The IMF has revised India's GDP growth rate for 2025-26 to 6.6%, a 0.2 percentage points increase from the previous forecast.
  • The upward revision is largely due to the carryover effect from a strong first quarter, which more than offset the increase in US tariffs on Indian imports since July.
  • The IMF has lowered its estimate for India's GDP growth rate for 2026-27 to 6.2%, a 20 basis points decrease from the previous forecast.
  • The global economic growth forecast has been revised upwards, with the IMF predicting 3.2% growth for 2025, up from 3.0% in July and a low of 2.8% in April.
  • The IMF warns that a renewed US-China trade war could significantly slow global output, with significant implications for India's economic growth.
  • The US effective tariff rate on imports from India has increased since July, which may have a negative impact on India's exports.
  • The IMF has highlighted the importance of avoiding a renewed trade war, citing the significant risks it poses to global economic growth.

Statistics:

  • India's GDP growth rate for 2025-26: 6.6% (up from 6.4% earlier)
  • India's GDP growth rate for 2026-27: 6.2% (down from 6.4% previously)
  • Global real GDP growth for 2025: 3.2% (up from 3.0% in July and 2.8% in April)
  • US effective tariff rate on imports from India since July: increased
  • India's exports: may be negatively impacted by increased US tariffs

Sources:

  • The International Monetary Fund (IMF) - World Economic Outlook report
  • HT Digital Content Services
  • The Indian Awaaz