IMF raises India's growth forecast to 7.3% in FY26; sees steady global growth

The International Monetary Fund has raised India's economic growth forecast to 7.3 per cent in fiscal 2026, up 0.7 percentage points from its October update, citing strong momentum in the fourth quarter. 

IMF has also revised India's Gross Domestic Product (GDP) growth forecast to 6.4 per cent for the fiscal year 2026-27 beginning April 1, 2026, from its earlier estimate of 6.2 per cent. However, the agency also said that the growth is likely to slow to 6.4 per cent in the following two fiscal years as cyclical factors fade.

The upgrade follows a revision earlier this month by India's National Statistics Office, which raised its estimate for growth to 7.4 per cent in the year ending March 31, above the government's initial projection of 6.3 per cent to 6.8 per cent.

In its World Economic Outlook report released on Monday, the IMF said the upward revision for fiscal 2026 reflected "better-than-expected outturn in the third quarter of the year and strong momentum in the fourth quarter."

"India is a key growth engine for the world," Julie Kozack, Director of the IMF's Communications Department said last week in a separate briefing, noting that the Fund had previously estimated growth for fiscal 2026 at 6.6 per cent in its Article IV staff report.

On inflation, the IMF said it is expected to go back to near target levels after a marked decline in 2025, driven by subdued food prices. The Reserve Bank has a target to maintain consumer price index (CPI) based headline inflation at a range of 2 to 4 per cent. 

Global growth is expected to remain steady, with momentum in high-tech sectors set to slow but still partly offsetting the weakness in other sectors, the IMF said. Risks remain tilted to the downside, it added, as US tariffs and global uncertainty are expected to weigh on activity, though the drag on growth should fade in 2026 and 2027.

The Fund projected global growth at 3.3 per cent in 2026 and at 3.2 per cent in 2027, broadly in line with an estimated 3.3 per cent outturn in 2025. It also said oil prices remained low and are expected to fall further on account of tepid demand growth and strong supplies.

(With inputs from Reuters and PTI)