IMF raises India's growth forecast to 7% for 2026
What's the story
The International Monetary Fund (IMF) has raised India's growth forecast for 2026 to 7%, up from the previous estimate of 6.4% made in July. The revision comes as a result of stronger-than-expected economic momentum, resilient domestic demand, and robust services activity in the face of rising oil prices. The IMF's latest assessment highlights India's unique position among energy-importing emerging economies with a weaker medium-term outlook.
Forecast revision
Projections for India's growth in 2027 also revised upward
The IMF has increased its growth forecast for India in 2026 by 0.6% points from its July estimate and by 0.5% points from April's prediction.
The organization also revised its projection for 2027, raising it to an optimistic 7%, which is an increase of 0.3% points since July and 0.5% since April.
Growth drivers
Strong domestic demand, services sector buoy India
The IMF credits India's improved economic outlook to its strong domestic demand and a thriving services sector. These factors have helped the country weather the impact of rising global oil prices.
"The region (Asia) has been incredibly resilient, even though its economies are net importers of energy and other commodities," said Silvana Tenreyro, IMF's economic counselor and Research Department Director.
Regional outlook
China's growth to slow down due to high oil prices
Tenreyro also revealed that the IMF had revised its growth projections for both China and India upward, with a significant upgrade for India.
China's growth is expected to slow down to 4.5% in 2026 and further to 4% in 2027 due to high oil prices, prolonged uncertainty, and structural challenges affecting economic activity.
Economic resilience
Risks facing India's economy
The IMF has linked India's improved economic outlook to sustained momentum and stronger growth potential. This is backed by favorable demographic trends, an expanding domestic market, and structural reforms.
However, the rosy forecasts don't eliminate risks facing the economy. Rising oil prices remain a vulnerability for India, while persistent global uncertainty could impact demand and growth.