IMF Raises FY26 Growth To 6.6 PC, Revised Down FY27 To 6.2 PC
The IMF noted that growth in India was strong in the first half of the year due to “robust service sector expansion”: Reports
CHENNAI: The International Monetary Fund has raised India’s GDP forecast for the current fiscal by 0.2 percentage points to 6.6 per cent due to a strong first quarter but has reduced the projection for next fiscal by 0.2 percentage points to 6.2 per cent from its July forecast due to the US tariff impact.
In India, growth is projected to be 6.6 per cent in FY26 and 6.2 per cent in FY27. Compared with the July World Economic Outlook update, this is an upward revision for the current year, with carryover from a strong first quarter more than offsetting the increase in the US effective tariff rate on imports from India since July, and a downward revision for next year. Compared with the pre-tariff forecast in October 2024, growth is projected to be cumulatively 0.2 percentage point lower.
The IMF noted that growth in India was strong in the first half of the year due to “robust service sector expansion”.
Retail inflation for FY26 is projected to be 2.8 per cent and 4 per cent for FY27. Monetary policy projections are consistent with achieving the Reserve Bank of India’s inflation target over the medium term. “This is largely a reflection of lower-than-expected outturns, with food, energy, and administrative prices playing a significant role”, it said.
The current account deficit will move up to 1 per cent in the current year against 0.6 per cent last year and further to 1.4 per cent in FY27. Unemployment is expected to remain stable at 4.9 per cent in both years. India has 8.2 per cent share in global GDP, 2.6 per cent share in total exports and 18.2 per cent share in world’s population, found the IMF.
Meanwhile, the global growth is projected to slow from 3.3 per cent in 2024 to 3.2 per cent in 2025 and to 3.1 per cent in 2026. This is an improvement relative to the July forecast—but cumulatively 0.2 percentage point below forecasts made before the policy shifts in October 2024, with the slowdown reflecting headwinds from uncertainty and protectionism, even though the tariff shock is smaller than originally announced.