IMF Raises FY26 GDP Forecast to 6.6% Backed by Strong Q1 Performance

Mumbai, 15 October 2025: India’s economic growth forecast for the current financial year has received a huge boost, with the International Monetary Fund (IMF) raising its gross domestic product (GDP) forecast for FY26 to 6.6% from its earlier estimate of 6.4%, an indication of the resilience of the Indian economy in the midst of global uncertainty and trade tensions.

The IMF’s July 2025 WEO update had put FY26 and FY27 growth at 6.4% versus 6.3% and 6.2% in April, showing a clear trend of upgrades for India this year. The World Economic Outlook (WEO) emphasises the point that the country’s strong domestic consumption, investment, and service and manufacturing sectors are the drivers that will underpin growth in light of shifting global trade patterns.

Strong Q1 Momentum Drives IMF’s Upgrade of India’s FY26 GDP Growth

The most recent World Economic Outlook (WEO) by the IMF states that India’s 7.8% expansion during the April–June quarter, the best in five quarters, has provided good carryover for FY26. Stronger performance offset the impact of recent increases in US tariffs on Indian exports, showing India’s resilience to maintain growth momentum even in the context of foreign headwinds.

IMF Lowers FY27 Growth Forecast, Signalling a Gradual Moderation Ahead

While growth in FY26 was upgraded, the IMF cut its FY27 projection by 20 basis points to 6.2%, attributing the revision to a moderation as the carryover effect starts to pass. T͏he re͏p͏ort explained this re͏v͏isio͏n͏ refl͏ects both the long-te͏rm impact͏s of hig͏h͏er US͏ t͏ariffs and ͏world e͏conomic headwinds more broadl͏y, including trade protection͏i͏sm and softening͏ global demand.

͏Last week, the World Bank also upgraded India’s FY26 growth estimate to 6.5% from 6.3%, which captures the country as the world’s fastest-growing major economy. The IMF further said that while global expansion is going to slow from 3.3% in 2024 to 3.2% in 2025, and then to 3.1% in 2026, India’s domestic demand, along with its strong first-quarter performance are core shock absorber against global economic headwinds.

India Stands Out Among Emerging Economies as Growth Holds Firm

For emerging and developing economies, the IMF projected growth of 4.3% in 2024, 4.2% in 2025, and subsequently to 4% in 2026, as global demand stabilises after recent policy changes in trade policies. India’s upward revision breaks with this overall trend, reflecting the relative resilience of the economy and its ability to keep up despite tariff shocks and global uncertainty.

India’s FY26 growth revision calls for monitoring quarterly performance numbers and overseas trade trends to measure the speed of economic momentum. The contrasting slowdown in FY27 calls for the contribution of policy shifts in the international landscape and strategic planning in collaborating with growth outlooks.

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