IMF Cuts India's FY26 GDP Growth Forecast To 6.2% Amid Tariff Tensions

The International Monetary Fund forecasts India’s GDP growth for the financial year 2026 at 6.2%, 30 basis points lower than January's projection this year, according to the latest edition of the Global Economic Outlook published on Tuesday. For FY27, IMF forecasts India’s growth at 6.3%, 20 basis points power than the forecast from January. The revisions to forecast are on account of higher levels of trade tensions and global uncertainty, the report explained.

India’s growth outlook remains relatively stable, while growth is supported by private consumption, particularly in rural areas, the report said.

Global growth is projected to drop to 2.8% in 2025 and 3% in 2026—down from 3.3% for both years projected in the January 2025 WEO Update, corresponding to a cumulative downgrade of 0.8 percentage point, and much below the historical (2000–19) average of 3.7%.

Since the release of the January 2025 WEO Update, a series of new tariff measures by the United States and countermeasures by its trading partners have been announced and implemented, ending up in near-universal US tariffs on April 2 and bringing effective tariff rates to levels not seen in a century, the report stated. "This on its own is a major negative shock to growth," it said.

The unpredictability with which these measures have been unfolding also has a negative impact on economic activity and the outlook and, at the same time, makes it more difficult than usual to make assumptions that would constitute a basis for an internally consistent and timely set of projections, it added.

Growth in advanced economies is projected to be 1.4% in 2025. Growth in the United States is expected to slow to 1.8%, a pace that is 0.9 percentage point lower relative to the projection in the January 2025 WEO Update, on account of greater policy uncertainty, trade tensions, and softer demand momentum, whereas growth in the euro area at 0.8% is expected to slow by 0.2 percentage point. In emerging market and developing economies, growth is expected to slow down to 3.7% in 2025 and 3.9% in 2026, with significant downgrades for countries affected most by recent trade measures.