IMF raises India’s GDP growth projection to 7.3% for FY26:Upgrade reflects strong economic output in recent quarters; inflation set to normalise

The International Monetary Fund (IMF) on Monday raised India’s GDP growth projection for fiscal year 2025–26 (FY26) to 7.3%, marking an upward revision of 0.7 percentage point from its October forecast. The upgrade reflects stronger-than-expected economic performance in recent quarters. The Washington-based multilateral lender also revised India’s growth forecast for FY27 (2026–27) to 6.4%, up from its earlier estimate of 6.2%. Strong Q3 outturn, Q4 momentum drive revision “In India, growth is revised upward by 0.7 percentage point to 7.3 per cent for 2025 (fiscal FY26), reflecting the better-than-expected outturn in the third quarter of the year and strong momentum in the fourth quarter,” the IMF said in its World Economic Outlook (WEO) update. However, the Fund expects growth to moderate to 6.4% in FY27 and FY28 as cyclical and temporary growth drivers fade. Official data points to robust expansion According to the Ministry of Statistics and Programme Implementation (MoSPI), cited by ANI, India’s GDP grew 8% during April–September 2025–26, supported by a robust 8.2% expansion in the July–September quarter. MoSPI’s First Advance Estimates project the Indian economy to grow 7.4% in FY26, compared with 6.5% growth in FY25. Inflation seen easing towards RBI’s target On inflation, the IMF said price pressures are expected to return close to target levels after a sharp decline in 2025, largely driven by subdued food prices. The Reserve Bank of India aims to maintain CPI-based headline inflation at 4%, with a tolerance band of ±2 percentage points. Global growth outlook remains resilient The IMF said global economic growth is projected to remain resilient at 3.3% in 2026 and 3.2% in 2027. This represents a slight upward revision for 2026 and no change for 2027 compared with the October 2025 WEO. “Global inflation is expected to fall, but US inflation will return to target more gradually. Key downside risks are reevaluation of technology expectations and escalation of geopolitical tensions. Policymakers should restore fiscal buffers, preserve price and financial stability, reduce uncertainty, and implement structural reforms,” the report said. Emerging markets, China see modest upgrades Growth in emerging market and developing economies is expected to hover just above 4% in 2026 and 2027. China’s growth forecast for 2025 has been revised upward by 0.2 percentage point to 5%, the IMF noted. Global inflation continues downward trend Global headline inflation is projected to ease from an estimated 4.1% in 2025 to 3.8% in 2026, and further to 3.4% in 2027, reflecting easing supply pressures and tighter monetary conditions.