Indian economy to grow at 6.5% in FY26 and FY27: IMF

India’s growth declined to a seven quarter low of 5.4 percent in Q2FY25, as manufacturing and investment growth declined.

The IMF forecast follows from World Bank update, which projected the economy to grow 6.7 percent over the next two fiscal, as it noted that manufacturing activity is expected to strengthen.

India, despite slower growth than earlier anticipated, will also keep the mantle of fastest growing major economy in the world.

Steady global growth

Much like India, the global growth is also expected to stay stable over the next two years at 3.3 percent, rising slightly from 3.2 percent in 2024.

“Medium-term risks to the baseline are tilted to the downside, while the near-term outlook is characterised by divergent risks. Upside risks could lift already-robust growth in the United States in the short run, whereas risks in other countries are on the downside amid elevated policy uncertainty,” IMF noted.

The international institution further highlighted that growing protectionism could disrupt growth.

“An intensification of protectionist policies, for instance, in the form of a new wave of tariffs, could exacerbate trade tensions, lower investment, reduce market efficiency, distort trade flows, and again disrupt supply chains,” it noted.