Context:
The International Monetary Fund (IMF) has raised its GDP growth forecast for India for FY2025-26 (FY26) to 6.4%, up from 6.2% projected in April 2025, as per the July 2025 World Economic Outlook (WEO) update.
Key Highlights:
- India’s revised projections:
- FY26 GDP growth forecast: Revised to 6.4% (↑ 20 basis points from April)
- FY27 GDP growth forecast: Revised to 6.4% (↑ 10 basis points)
- Reasons for upward revision:
- Benign external environment
- Lower inflation, especially due to falling food prices
- Suspension of higher tariffs
- Continued reform momentum supporting robust consumption and public investment
- Structural priorities for India (IMF recommendations):
- Foster job creation and reskill excess agricultural labor
- Invest in infrastructure and remove trade restrictions
- Long-term reforms in education, land laws, business regulations, and social safety nets
- Global projections:
- Global GDP growth:
- 2025: 3% (↑ 20 bps from April forecast)
- 2026: 3.1% (↑ 10 bps)
- Global GDP growth:
- Drivers of global resilience (IMF Chief Economist Pierre-Olivier Gourinchas):
- Front-loading of exports to the US amid tariff fears
- Easing financial and monetary conditions due to receding global inflation
- US dollar depreciation (~8% since January 2025)
- Other global and regional growth forecasts (2025):
- China: Revised upward by 80 bps to 4.8%
- Emerging markets & developing economies: 4.1% (2025) and 4% (2026)
- India forecast comparison (FY26):
- Agency FY26 Forecast (%) IMF 6.4, S&P Global 6.5, World Bank 6.6, ADB 6.3, OECD 6.0, India Ratings 6.3, UBS Securities 6.4.
