IMF Upgrades India’s FY26 Growth Forecast to 6.4%

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)
• 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.

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