New Delhi: The International Monetary Fund (IMF) has raised India’s growth forecast for 2026 to 7%, from its earlier estimate of 6.4%, in its October World Economic Outlook. The IMF has also upgraded its 2027 projection to 7%, up from 6.7%, citing resilient domestic demand and robust services activity.
The revision follows stronger-than-expected economic performance, with India’s GDP growing 7.8% year-on-year in the first quarter of FY27. The Reserve Bank of India has also raised its FY27 growth forecast to 7.1%, from 6.7%.
Global Growth Outlook Remains Uneven
The IMF expects global economic growth to slow to 3.1% in 2026 from 3.5% in 2025 before recovering to 3.4% in 2027. China’s growth is projected to ease to 4.5% in 2026 and 4% in 2027.
Higher energy prices, geopolitical tensions and trade uncertainties continue to pose risks to the global economy.
Inflation Expected to Rise
Despite the stronger growth outlook, the IMF projects India’s inflation to average 5% in FY27, compared with 2% in FY26, before easing to 4.4% in FY28. Higher crude oil and commodity prices could add to domestic inflationary pressures and complicate monetary policy decisions.
Current Account Deficit May Widen
India’s current account deficit is projected to widen to 1.5% of GDP in 2026, from 0.7% in 2025, before narrowing to 1.3% in 2027. Higher crude oil import costs could contribute to the increase.
Overall, the IMF’s revised projections highlight India’s economic resilience, supported by domestic demand and services growth. However, inflation, energy prices and global economic uncertainty remain key challenges.
