IMF Retains India's GDP Growth Forecast At 6.5% For FY26, FY27

The International Monetary Fund, in its World Economic Outlook report released on Friday, has retained India's gross domestic product growth forecast at 6.5% for fiscal 2026 and fiscal 2027.

The forecast is the same as "projected in October and in line with potential", the report stated.

For the ongoing fiscal, however, IMF has lowered India's GDP growth forecast to 6.5%. This is 50 basis points lower as compared to the forecast of 7% growth issued in October.

Notably, India's economic growth has lost some pace after soaring to as high as 8.4% in fiscal 2024. The country remains the "world's fastest growing economy"—as underlined by the World Bank on Thursday—but logged slower GDP growths of 6.7% and 5.4% in the first and second quarters, respectively, of fiscal 2025.

The second quarter growth was the slowest in nearly the last two years, and was followed by India's National Statistical Office lowering the fiscal 2025 growth forecast to 6.4%.

According to IMF, the growth in India "slowed more than expected, led by a sharper-than-expected deceleration in industrial activity."

A day earlier, the World Bank in its flagship Global Economic Prospects report also retained India's GDP growth forecast at 6.7% in fiscal 2026 and fiscal 2027.

"Global growth is projected at 3.3% both in 2025 and 2026, below the historical (2000–19) average of 3.7%," IMF's World Economic Outlook report stated. The forecast is unchanged as compared to that released in October.

The global GDP growth in the July-September quarter, however, slipped 0.1 percentage point below the forecast released in October, IMF said. Thus was driven by disappointing "data releases" in some Asian and European economies, it added.

The reported pointed towards the slower growth in China—at 4.7% in year-over-year terms in the third quarter of calendar year 2024—which was "below expectations".

China's faster-than-expected net export growth "only partly offset a faster-than-expected slowdown" in consumption amid delayed stabilisation in the property market and persistently low consumer confidence, it added.

A slowdown was witnessed in India as well during this period, led by a sharper-than-expected deceleration in industrial activity, IMF noted. In Japan, output contracted mildly owing to temporary supply disruptions, it said.

"By contrast, momentum in the United States remained robust, with the economy expanding at a rate of 2.7% in year-over-year terms in the third quarter, powered by strong consumption," the report said.

Meanwhile, the global headline inflation is expected to decline to 4.2% in 2025 and to 3.5% in 2026, "converging back to target earlier in advanced economies" than in emerging market and developing economies, IMF stated.