Has the IMF Upgraded India's GDP Growth Forecast to 6.4% for FY26 and FY27?

New Delhi, July 29 (NationPress) The International Monetary Fund (IMF) has projected a GDP growth rate of 6.4 percent for India in both FY26 and FY27, with these estimates being adjusted slightly upward. This adjustment is indicative of a more favorable external environment compared to what was anticipated in the April reference forecast, as detailed in the IMF’s World Economic Outlook (WEO) report released on Tuesday.

The IMF has increased its growth outlook for India's current fiscal year by 20 basis points (bps) to 6.4 percent. Additionally, the growth forecast for FY27 has been revised upward by 10 bps to the same rate of 6.4 percent.

According to the report, global growth is projected to reach 3.0 percent in 2025 and 3.1 percent in 2026, marking an upward revision from the April 2025 WEO. This improvement is attributed to front-loading prior to tariffs, reductions in effective tariff rates, enhanced financial conditions, and fiscal expansions in significant jurisdictions.

While global inflation is anticipated to decrease, inflation in the United States is expected to remain above its target. The report also notes that there are downside risks associated with potentially increased tariffs, high uncertainty, and ongoing geopolitical tensions.

In the context of emerging markets and developing economies, growth is expected to be 4.1 percent in 2025 and 4.0 percent in 2026.

Global headline inflation is projected to decline to 4.2 percent in 2025 and 3.6 percent in 2026, a trend consistent with earlier forecasts made in April. However, notable differences exist between countries, with inflation in the United States likely remaining above target, while other major economies may experience more modest inflation rates.

The IMF report warns that risks to the economic outlook remain tilted toward the downside, similar to the April 2025 WEO. A resurgence in effective tariff rates could potentially dampen growth, while heightened uncertainty may increasingly impact economic activity as deadlines for additional tariffs approach without substantial, long-term agreements.

Furthermore, geopolitical tensions could disrupt global supply chains and elevate commodity prices. Larger fiscal deficits or increased risk aversion might lead to higher long-term interest rates and tighter global financial conditions.

The IMF emphasizes that, coupled with concerns about fragmentation in the global economy, these factors could lead to renewed volatility in financial markets. However, global growth could benefit if trade negotiations result in a more predictable framework and a reduction in tariffs. Policies must aim to foster confidence, predictability, and sustainability by alleviating tensions, maintaining price and financial stability, restoring fiscal buffers, and implementing essential structural reforms.