India to grow at 6.4% in FY27, says IMF
What's the story
The International Monetary Fund (IMF) has revised India's economic growth forecast for the fiscal year 2026-27 to 6.4%. The new projection is slightly lower than the previous estimate of 6.5% made in April. The revision comes as a result of global challenges such as the ongoing conflict in West Asia and rising energy prices, which are affecting global economic activity and keeping energy costs high.
Future projections
Growth bounce back expected in FY28
Despite the downward revision for FY27, the IMF expects India's economic growth to bounce back in fiscal year 2027-28. The global lender has raised its growth projection for this period from an earlier estimate of 6.5% to a more optimistic 6.7%. This suggests that once the external shock of higher energy prices starts to subside, India's economy could regain some momentum and improve its growth rate.
International outlook
Global growth projections and risks
The IMF has projected global growth at 3% in 2026 and 3.4% in 2027. The slowdown is largely attributed to the ongoing war in the Middle East, which has been partly offset by an uptick in demand-driven momentum within the global technology cycle, due to advances in artificial intelligence (AI). However, risks remain tilted toward the downside, with renewed conflict posing an immediate threat to economic stability worldwide.
Geopolitical impact
Impact of Middle East conflict on global economy
The IMF has warned that any re-escalation of the Middle East conflict could prolong commodity price volatility, disrupt supply chains, raise prices, and tighten financial conditions. The global lender's baseline scenario assumes that the Strait of Hormuz will reopen by mid-July and conditions will broadly return to pre-war levels by March 2027. This projection has led to a higher average petroleum spot price index for 2026 than previously estimated in April's forecast.