IMF Raises India's Growth Forecast to 6.5 Percent for Fiscal Year 2027

IMF Raises India's Economic Growth Forecast Amid Global Slowdown

The International Monetary Fund (IMF) has revised its growth forecast for the Indian economy, predicting a 6.5 percent growth in 2026, up from its previous estimate of 6.4 percent in January. This upward revision is attributed to the carryover of the strong 2025 outturn and the decline in additional US tariffs on Indian goods from 50 to 10 percent, which outweigh the adverse impact of the Middle East conflict. The IMF notes that growth is projected to stay at 6.5 percent in 2027.

In contrast, the government has estimated the economy to expand at a rate of 7.6 percent in the fiscal year 2026, a full percentage point higher than the IMF's earlier estimate. This divergence in growth projections highlights the complexities of economic forecasting and the various factors that can influence the trajectory of a country's economy.

On the inflation front, the IMF predicts a sharp acceleration in prices. India's inflation is expected to rise to 4.7 percent in the fiscal year 2027, compared to 2.1 percent in the previous year, and return to the Reserve Bank of India's (RBI) midpoint of 4 percent in the fiscal year 2028. This increase in inflation is attributed to the expected rise in food prices.

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Globally, the IMF expects a slowdown in economic growth, with growth falling to 3.1 percent in 2026, compared to 3.3 percent projected earlier. The US and China are expected to escape relatively unscathed, with a 0.1 percentage point decline in growth, while Europe is expected to be the worst affected, with the UK experiencing a 0.5 percentage point decline and the Euro Area seeing a growth slowdown of 0.2 percentage points.