IMF Raises India’s GDP Forecast, Expects 6.4 Per Cent Growth Through FY26

The IMF said that in emerging market and developing economies, growth is expected to be 4.1 per cent in 2025 and 4.0 per cent in 2026.

The IMF said that global growth is projected at 3 per cent for 2025 and 3.1 per cent in 2026.

Source : ABPLIVE AI

India is projected to grow at 6.4 per cent in fiscal year 2025 and 2026, and the country’s stable growth is driven by a reform momentum supporting robust consumption growth and a push for public investment, the International Monetary Fund has said.

The IMF released its World Economic Outlook (WEO) Update on Tuesday.

It said that growth in India is projected to be 6.4 per cent in 2025 and 2026, with both numbers revised slightly upward, reflecting a more "benign external environment" than assumed in the April reference forecast.

In a footnote, the IMF said that for India, data and projections are presented on a fiscal year (FY) basis. India's growth projections are 6.7 per cent for 2025 and 6.4 per cent for 2026, based on the calendar year.

During a press briefing, IMF Research Department Division Chief Deniz Igan, responding to a question on India, said, "We have actually quite stable growth” for the country.

India, which grew at 6.5 per cent in 2024, is projected to grow at 6.4 per cent in 2025 as well as in 2026.

“The 6.4 per cent growth rates for this year and next are slight upgrades compared to what we had in April - 0.2 percentage points in 2025 and 0.1 percentage point in 2026,” she said.  Igan said that the driver of this relatively stable growth for India “is the fact that there has been a reform momentum supporting robust consumption growth and a push for public investment.”

She said that going forward, it will be important for India to “keep this momentum going and to continue the recent good growth performance that we have seen.” For India, the priorities would include fostering job creation and absorbing excess labour from the agricultural sectors by reskilling labour, by allowing more labour market flexibility, while at the same time, continuing to invest in infrastructure and removing trade restrictions.

"More in the medium term, India needs to continue to invest in education, take a step at land reform and expand social safety net and reduce red tape to allow businesses perform better,” she said.

The IMF said that in emerging market and developing economies, growth is expected to be 4.1 per cent in 2025 and 4.0 per cent in 2026.

Relative to the forecast in April, growth in 2025 for China is revised upward by 0.8 percentage point to 4.8 per cent. This revision reflects stronger-than-expected activity in the first half of 2025 and the significant reduction in US–China tariffs.

Growth in 2026 is projected at 4.2 per cent, again reflecting the lower effective tariff rates, the IMF said. The IMF said that global growth is projected at three per cent for 2025 and 3.1 per cent in 2026. The forecast for 2025 is 0.2 percentage points higher than that in the reference forecast of the April 2025 World Economic Outlook and 0.1 percentage points higher for 2026.

This reflects stronger-than-expected front-loading in anticipation of higher tariffs; lower average effective US tariff rates than announced in April; an improvement in financial conditions, including due to a weaker US dollar; and fiscal expansion in some major jurisdictions.

Growth in advanced economies is projected to be 1.5 per cent in 2025 and 1.6 per cent in 2026. In the United States, with tariff rates settling at lower levels than those announced on April 2 and looser financial conditions, the economy is projected to expand at a rate of 1.9 per cent in 2025.

This is 0.1 percentage point higher than the April reference forecast, with some offset from private demand cooling faster than expected and weaker immigration. Growth is projected to pick up slightly to 2.0 per cent in 2026, it said.

(This report has been published as part of the auto-generated syndicate wire feed. Apart from the headline, no editing has been done in the copy by ABP Live.)