India will remain one of the world’s fastest-growing large economies through 2025–26, with GDP expected to rise 6.6 percent, according to the International Monetary Fund’s latest World Economic Outlook (WEO) report. As per the ANI report, the IMF said that India’s robust first-quarter performance has more than offset the drag from higher US tariffs on Indian exports.
The upward revision from April estimates points to India’s economic resilience and domestic strength even as global growth faces renewed headwinds.
India to outpace China, sustain growth momentum
With the new forecast, India is set to outpace China, which the IMF expects to grow 4.8 percent in 2025–26. The Fund attributed India’s resilience to strong domestic consumption, manufacturing revival, and service-sector expansion.
According to ANI, however, the IMF also trimmed India’s 2026 growth forecast to 6.2 percent, warning that the first-quarter surge may not sustain at the same pace as early momentum fades.
“The upward revision primarily reflects the carryover effect of a strong start to FY26 rather than any offsetting from recent tariff actions,” the IMF report said.
India’s economy grew 6.5 percent in FY25 and maintained a government-projected band of 6.3–6.8 percent for FY26, even amid rising global uncertainty.
Global economy slowing, but India defies trend
The IMF projects global GDP growth at 3.2 percent in 2025, slowing to 3.1 percent in 2026, reflecting a moderation from 2024’s 3.3 percent.
Advanced economies are expected to expand at a modest 1.6 percent, while emerging markets are seen growing 4.2 percent on average.
Among major economies, Spain is projected to be the fastest-growing advanced nation at 2.9 percent, followed by the United States at 1.9 percent.
In contrast, Japan (1.1 percent) and Canada (1.2 percent) are expected to see slower growth.
The IMF said its October forecasts mark an upward revision from April, though they remain below pre-tariff projections as global trade faces disruptions from protectionist policies and policy uncertainty.
Tariff shock smaller than expected
Despite fears of a sharper slowdown after the US imposed higher tariffs on Indian and Chinese goods, the IMF said the actual economic drag was limited.
Strong consumption, robust manufacturing activity, and rising private investment helped India absorb the shock.
“The effects of tariffs have been less severe than anticipated, thanks to resilient domestic demand and trade diversification,” the IMF noted.
Inflation easing globally, but challenges persist
The WEO report said global inflation continues to decline, although the trend is uneven. Inflation remains above target in the United States, with risks tilted upward, while price pressures are subdued in other economies.
The IMF also warned that “prolonged uncertainty, protectionism, and labour market shocks” could undermine recovery efforts. Fiscal vulnerabilities and potential financial market corrections, it added, could pose new risks.
Policy advice: rebuild buffers, preserve independence
The Fund urged governments to restore fiscal credibility and preserve central bank independence amid growing global uncertainty.
“Fiscal buffers should be rebuilt. Central bank independence must be preserved. Efforts on structural reforms should be redoubled,” the IMF said, calling for credible, transparent, and sustainable policy actions.
The IMF also pressed for renewed trade diplomacy and macroeconomic coordination to counter the ripple effects of tariffs and supply-chain fragmentation.
(With inputs from ANI)
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
