GDP Growth / IMF Raises India's Growth Forecast to 7% for 2026; Calls It One of World's Fastest-Growing Major Economies
·1 hour ago·4 min read
Key Points
The IMF raised India's growth forecast to 7.0% for 2026 and 2027 on a fiscal-year basis, describing the country as one of the world's fastest-growing major economies.
Washington, Oct 13: The International Monetary Fund (IMF) on Tuesday raised its growth forecast for India to 7.0 per cent for 2026, describing the country as one of the world’s fastest-growing major economies despite the global economic headwinds caused by the Middle East conflict and rising oil prices.
In its October 2026 World Economic Outlook, the IMF projected India’s economy to grow by 7.0 per cent in both 2026 and 2027, with the estimates presented on a fiscal-year basis.
The 2026 projection is 0.6 percentage points higher than in the July 2026 WEO Update and 0.5 percentage points higher than in the April 2026 WEO. The 2027 projection was raised by 0.3 percentage points from July and by 0.5 percentage points from April.
India's economy grew 7.8 per cent in 2025, according to the report, which presents fiscal year 2025-26 in the 2025 column.
In its October 2026 World Economic Outlook, the IMF projected India’s economy to grow by 7.0 per cent in both 2026 and 2027, with the estimates presented on a fiscal-year basis.
The 2026 projection is 0.6 percentage points higher than in the July 2026 WEO Update and 0.5 percentage points higher than in the April 2026 WEO. The 2027 projection was raised by 0.3 percentage points from July and by 0.5 percentage points from April.
India's economy grew 7.8 per cent in 2025, according to the report, which presents fiscal year 2025-26 in the 2025 column.
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On a calendar year basis, the Fund put India's growth projections at 7.4 per cent for 2026 and 7.0 per cent for 2027.
The IMF said the higher forecast "reflects stronger-than-expected momentum, supported by resilient domestic demand and robust services activity".
"India's growth remained robust, underpinned by domestic demand and services, despite higher oil prices," the WEO said.
Looking further out, the report said the medium-term outlook had become uneven, with downgrades concentrated among economies hit directly by the Middle East conflict and among "energy-importing emerging market and developing economies elsewhere, excluding India".
"India stands out with upward revisions, reflecting sustained momentum and growing evidence of stronger growth potential supported by favourable demographic dynamics, a large and expanding domestic market, and continued structural reforms," it said.
The Fund projected consumer prices in India to rise 5.0 per cent in 2026, up from 2.0 per cent in 2025, before easing to 4.4 per cent in 2027.
The IMF said the higher forecast "reflects stronger-than-expected momentum, supported by resilient domestic demand and robust services activity".
"India's growth remained robust, underpinned by domestic demand and services, despite higher oil prices," the WEO said.
Looking further out, the report said the medium-term outlook had become uneven, with downgrades concentrated among economies hit directly by the Middle East conflict and among "energy-importing emerging market and developing economies elsewhere, excluding India".
"India stands out with upward revisions, reflecting sustained momentum and growing evidence of stronger growth potential supported by favourable demographic dynamics, a large and expanding domestic market, and continued structural reforms," it said.
The Fund projected consumer prices in India to rise 5.0 per cent in 2026, up from 2.0 per cent in 2025, before easing to 4.4 per cent in 2027.
It projected India's current account deficit at 1.5 per cent of GDP in 2026 and 1.3 per cent in 2027, compared with 0.7 per cent in 2025.
The report also singled out India on public finances. It said primary deficits in the largest advanced and emerging market economies during 2020-25 remained "substantially larger than before the pandemic," adding that "in most of these economies, with India an exception," stabilising debt-to-GDP ratios at 2025 levels would require greater fiscal consolidation than now planned.
On trade, the WEO said new agreements "such as the EU's recent trade agreements with India and MERCOSUR... or the United Kingdom's agreement with India" could lower tariff and non-tariff barriers, help economies adjust to recent trade policy changes and strengthen supply-chain resilience.
China's growth is projected to slow to 4.5 per cent in 2026 and 4.0 per cent in 2027, from 5.0 per cent in 2025. The IMF said "higher global oil prices, together with protracted uncertainty and structural headwinds" were expected to weigh on Chinese activity.
The United States is projected to grow 2.3 per cent in both 2026 and 2027.
Global growth is projected at 3.1 per cent in 2026 and 3.4 per cent in 2027. Emerging and developing Asia is forecast to grow 5.1 per cent in 2026.
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The Middle East and Central Asia region is projected to contract 0.3 per cent in 2026, with Saudi Arabia's economy shrinking 3.3 per cent, before rebounding 7.9 per cent in 2027.
The Fund's baseline assumes an average oil price of $95.74 a barrel in 2026 and $87.39 in 2027, against $67.74 in 2025.
Global headline inflation is projected to rise to 4.7 per cent in 2026 before easing to 4.1 per cent in 2027.
"Global activity is projected to grow at 3.1 per cent in 2026 and 3.4 per cent in 2027," IMF Chief Economist Silvana Tenreyro wrote in a blog accompanying the report, adding that the forecast "remains broadly unchanged from April, despite a more persistent energy market disruption than anticipated".
She warned that "this resilience is under strain".
The report cautioned that risks to the global economic outlook remained “skewed to the downside”, warning that a prolonged stalemate or further escalation of the conflict in the Middle East could keep energy and food prices high and volatile, reignite inflationary pressures, strain fiscal and external balances, and dampen economic growth.
(IANS)
The report also singled out India on public finances. It said primary deficits in the largest advanced and emerging market economies during 2020-25 remained "substantially larger than before the pandemic," adding that "in most of these economies, with India an exception," stabilising debt-to-GDP ratios at 2025 levels would require greater fiscal consolidation than now planned.
On trade, the WEO said new agreements "such as the EU's recent trade agreements with India and MERCOSUR... or the United Kingdom's agreement with India" could lower tariff and non-tariff barriers, help economies adjust to recent trade policy changes and strengthen supply-chain resilience.
China's growth is projected to slow to 4.5 per cent in 2026 and 4.0 per cent in 2027, from 5.0 per cent in 2025. The IMF said "higher global oil prices, together with protracted uncertainty and structural headwinds" were expected to weigh on Chinese activity.
The United States is projected to grow 2.3 per cent in both 2026 and 2027.
Global growth is projected at 3.1 per cent in 2026 and 3.4 per cent in 2027. Emerging and developing Asia is forecast to grow 5.1 per cent in 2026.
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The Middle East and Central Asia region is projected to contract 0.3 per cent in 2026, with Saudi Arabia's economy shrinking 3.3 per cent, before rebounding 7.9 per cent in 2027.
The Fund's baseline assumes an average oil price of $95.74 a barrel in 2026 and $87.39 in 2027, against $67.74 in 2025.
Global headline inflation is projected to rise to 4.7 per cent in 2026 before easing to 4.1 per cent in 2027.
"Global activity is projected to grow at 3.1 per cent in 2026 and 3.4 per cent in 2027," IMF Chief Economist Silvana Tenreyro wrote in a blog accompanying the report, adding that the forecast "remains broadly unchanged from April, despite a more persistent energy market disruption than anticipated".
She warned that "this resilience is under strain".
The report cautioned that risks to the global economic outlook remained “skewed to the downside”, warning that a prolonged stalemate or further escalation of the conflict in the Middle East could keep energy and food prices high and volatile, reignite inflationary pressures, strain fiscal and external balances, and dampen economic growth.
(IANS)
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