IMF raises India's FY26 GDP growth forecast by 20 basis points to 6.6%

Says strong first-quarter growth offsets US rate hike, revises global projection for 2025 upwards by 20 bps

The International Monetary Fund (IMF) on Tuesday raised India’s gross domestic product (GDP) growth forecast for 2025-26 (FY26) by 20 basis points (bps) to 6.6 per cent, citing a “strong first quarter” that more than offset the impact of the US rate hike, in its latest World Economic Outlook report. The IMF also revised the growth forecast for 2026-27 (FY27) upwards by 20 bps to 6.2 per cent.

 

Last week, the World Bank increased India’s FY26 GDP forecast to 6.5 per cent from 6.3 per cent in June, while lowering the FY27 forecast by 20 bps to 6.3 per cent, citing higher-than-expected tariffs on India’s exports to the US.

 

The World Bank added that India is expected to remain the world’s fastest-growing major economy, supported by continued strength in consumption growth.

 

Pierre-Olivier Gourinchas, economic counsellor and director of the research department at the IMF, said countries need to build economic resilience through fiscal buffers, strong institutional frameworks, and active participation in the global economy.

 

Addressing a press briefing, Gourinchas observed that growth is driven by the private sector and the adoption of technologies developed elsewhere. He said, “Countries need to make the right efforts to scale their labour force and invest in infrastructure so that they can grow rapidly and unleash private sector innovation and entrepreneurship.”

 

Gourinchas’ comments follow recent remarks by IMF Managing Director Kristalina Georgieva, who said uncertainty is the “new normal” and countries need to buckle up.

 

The Economic Survey has projected India’s GDP growth at between 6.3 per cent and 6.8 per cent for FY26. Chief Economic Advisor V Anantha Nageswaran recently said, “While I could actually be looking at revising my GDP numbers upwards, given my cautious nature, I am more comfortable now in saying that we are tending towards the upper end of this range.”

 

In July, the IMF had raised India’s growth projection by 20 bps to 6.4 per cent, citing reform momentum, robust consumption growth, and a push for public investment. A benign external environment and lower inflation were also cited as reasons for the upgrade.

 

The global growth projection for 2025 has been revised upwards by 20 bps to 3.2 per cent, while the forecast for 2026 remains unchanged at 3.1 per cent.

 

“The global economy has shown resilience to trade policy shocks, partly because these shocks materialised on a smaller scale than expected, but the drag from shifting policies is becoming visible in more recent data,” the IMF report said.

 

India is facing a 50 per cent tariff from the US, affecting labour-intensive sectors such as textile, footwear, and marine products.

 

Moreover, the Trump administration’s proposed one-time fee of $100,000 on new visa applications for skilled workers could impact India’s $280 billion technology services industry and put thousands of jobs at risk. The finance ministry said the effects of these restrictions would need close monitoring, particularly regarding future remittances and service trade surpluses.