IMF Raises India’s FY26, FY27 Growth Forecasts Amid Global Trade Surge

India’s earlier growth forecast was 6.2 per cent for FY26 and 6.3 per cent for FY27, compared to 6.5 per cent in FY25.

Global growth is projected at 3.0 per cent for 2025 and 3.1 per cent in 2026. The forecast for 2025 is 0.2 percentage points higher than the April forecast and 0.1 percentage point higher for 2026. This improvement is due to stronger-than-expected export activity ahead of anticipated tariff hikes, lower-than-announced average US tariffs, a weaker US dollar, improved financial conditions, and fiscal expansion in some major economies.

Concerns over future tariffs led to a surge in exports to the US in the first quarter, boosting economic activity in both Europe and Asia.

In addition, global financial and monetary conditions eased as inflation continued to decline, largely in line with previous projections.

The US dollar has depreciated by roughly 8 per cent since January. Unlike past tariff episodes where the tariff-imposing country's currency appreciated to offset impacts, the current depreciation has amplified competitiveness challenges for other countries.

“Accordingly, we have revised our growth projections upwards from the April 2025 reference forecast — from 2.8 per cent to 3.0 per cent this year, and from 3.0 per cent to 3.1 per cent next year,” the IMF said.

In the United States, with tariff rates settling lower than those announced on April 2 and with looser financial conditions, the economy is projected to grow at 1.9 per cent in 2025 — 0.1 percentage point higher than the earlier forecast — though partly offset by cooling private demand and slower immigration.

Meanwhile, the IMF expects global headline inflation to decline to 4.2 per cent in 2025 and 3.6 per cent in 2026, a trajectory similar to its April projections.