IMF Revises India’s FY26 Growth Forecast Down to 6.2%

IMF’s Growth Forecast for India

• The International Monetary Fund (IMF) has lowered India’s FY26 GDP growth forecast by 30 basis points, bringing it down to 6.2% from its previous projection of 6.5%.
• The revision comes as a result of increased global trade tensions and mounting uncertainty, as noted in the latest World Economic Outlook (WEO) report.

Factors Impacting Growth Outlook

• Private consumption, particularly in rural areas, remains a strong driver of growth in India.
• However, the IMF cautioned that the global economic environment, marked by higher trade tensions and policy ambiguity, has contributed to this downward revision.
• The IMF’s global growth forecast for 2025 has also been downgraded from 3.3% to 2.8%, reflecting the broader economic slowdown.

Global Growth Trends and India’s Position

• The IMF’s revised global forecast reflects a broad-based downgrade across countries, mainly due to the effects of new trade measures, trade linkages, and rising economic uncertainty.
• The global growth is expected to recover slightly to 3% in 2026, but this is still lower than the previous projection.

Comparison with Other Forecasts

• India’s revised forecast by the IMF is now 6.2%, down from 6.5% previously. Other agencies have also adjusted their projections:
  • Moody’s: Reduced to 5.6% from 6.6%
  • ADB: Adjusted to 6.7% from 7%
  • Fitch: Adjusted to 6.4% from 6.5%
  • UBS: Downgraded to 6% from 6.3%

IMF’s Global Economic Outlook

• Pierre-Olivier Gourinchas, IMF’s Economic Counsellor, remarked that the world economy is entering a “new era”, as global economic systems undergo a reset due to escalating trade tensions.

The IMF’s revised growth projection for India reflects the evolving global challenges, but India remains one of the key economies showing relative stability in the face of these uncertainties.

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