The International Monetary Fund on Tuesday marginally raised India’s growth forecast for 2026 and 2027, to 6.5% in both years, even as it cut its global growth forecast to 3.1% in 2026, down from the 3.3% it forecast in January.
The IMF’s latest World Economic Outlook (WEO) report comes against the backdrop of the war in West Asia, which has roiled global markets and supply chains. The United States and Iran are currently in the middle of an uncertain ceasefire, but the first round of talks after the ceasefire announcement, held last weekend, did not result in a peace agreement.
India has also been affected by the war, with gas supplies particularly affected, but the IMF update reaffirms that the country will remain the world’s fastest-growing major economy in both 2026 and 2027. However, the IMF update made it clear that the current global environment is hostile from a growth perspective.
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The April 2026 edition of the report, titled “The Global Economy at War,” also revised the IMF’s estimate for India’s growth in 2025 to 7.6%, a full percentage point higher than it had forecast in October last year. This is in line with India’s official GDP growth rate of 7.6% in 2025-26. The IMF calendar year forecasts/estimates represent India’s fiscal years in such a way that the year 2025 in the IMF data captures the period from 2025 to 2026 for India’s fiscal years. Meanwhile, India’s growth in both FY26 and FY27 is expected to be 6.5%, which would still put the country far ahead of other major economies. The IMF’s 2026 growth forecast for India is slightly lower than the Reserve Bank of India’s growth forecast of 6.9% for 2026-27.
“In India, growth for 2025 was revised up by 1.0 percentage points from October, to 7.6%, reflecting better-than-expected results in the second and third quarters of the fiscal year and the continuation of strong momentum in the fourth quarter. For 2026, growth was revised moderately upward by 0.3 percentage points (0.1 percentage points compared to January) to 6.5%, led by positive contributions from strong carryovers,” the report said. 2025 and additional US tariffs on Indian goods reduced from 50% to 10%, which outweighs the negative impact of the conflict in the Middle East, growth is expected to remain at 6.5% in 2027.”
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Inflation in India is expected to rise moderately, rising to 4.7% in 2026 from 3.3% in 2025, before falling again to 4% in 2027, largely due to higher global energy and food prices resulting from the conflict. This is largely in line with the Reserve Bank of India’s inflation forecast of 4.6% in 2026-27.
However, the broader message of the IMF report is that the global economy has been derailed by the war in West Asia. Instead of a standard baseline, the IMF used what it calls “benchmark projections” this time around, which assume that conflict will remain limited in duration, intensity and scope, and that unrest will fade away by mid-2026. Even under this relatively benign assumption, global growth is expected to be 3.1% in 2026 and 3.2% in 2027, below the roughly 3.4% pace seen in 2024. And 2025. The International Monetary Fund warned that if the conflict extended longer than expected, the damage to the global economy could be much greater. In an extreme scenario where more damage occurs to energy infrastructure in the conflict zone, global growth could fall to only about 2% in 2026.
