India's economy to grow at 6.4% in FY26: IMF
What's the story
The International Monetary Fund (IMF) has revised India's economic growth forecast for the financial year 2025-26 to 6.4%, an upward revision of 20 basis points from its April 2025 projection. For 2026-27, the forecast is also set at 6.4%, reflecting a 10 basis point increase. The IMF's World Economic Outlook Update shows a more favorable external environment than previously assumed, contributing to these revisions.
Calendar projection
India projected to be fastest-growing major economy
For the calendar years, the IMF projects India's economy to grow by 6.7% in 2025 and 6.4% in 2026. These numbers confirm India as the fastest-growing major economy in the world.
Global outlook
Global growth forecast revised up
The IMF has also revised its global growth forecast, expecting it to reach 3% in 2025 and 3.1% in 2026. This is a slight increase from the April 2025 projections. However, despite the upgrade, growth remains below the pre-pandemic historical average of 3.7%, thus highlighting persistent structural and policy challenges across countries.
Growth drivers
Reasons behind the growth
The IMF's revised global growth forecast is mainly due to stronger-than-expected trade and investment in early 2025. This was driven by preemptive activity ahead of expected tariff hikes, the improved financial conditions, and lower-than-expected average US tariff rates. These factors have temporarily boosted global demand but are likely to fade in the year's second half.
Market forecast
Growth in emerging markets and developing economies
The IMF projects growth in emerging markets and developing economies to be 4.1% in 2025, and 4% in 2026. For China, the 2025 growth forecast has been revised upward by 0.8% to 4.8%. This adjustment is due to stronger-than-expected activity in H1 of 2025 and a significant reduction in US-China tariffs, according to the IMF's report.