Against this backdrop, the latest report by the International Monetary Fund (IMF) on World Economic Outlook: Global Economy in Flux has brought cheers, especially to India. The IMF has projected India’s real GDP growth at 6.6 per cent for 2025 and 6.2 per cent for 2026. In its previous economic outlook forecast, the IMF had projected the GDP at 6.4 per cent for 2025. The upward revision of estimate for 2025 is due to a strong first quarter. Significantly enough, this seems to have more than compensated for the impact of higher tariffs imposed by the US on exports since July.
The growth for 2026 has been revised slightly lower, though. The report points out that India’s GDP growth in June-end came in at a five-quarter high of 7.8 per cent, primarily due to a boost in manufacturing, services and construction industry. Compared with the pre-tariff forecast in October 2024, the growth is projected to be cumulatively 0.2 percentage points lower. The positive IMF growth forecast comes at a time when its estimates on emerging and developing Asian countries suggest an overall decline from 5.3 per cent in 2024 to 5.2 per cent in 2025 and further to 4.7 per cent in 2026.
The IMF projections on India are in line with those of the Reserve Bank, which, in its last MPC (monetary policy committee) meeting, had estimated the GDP to be 6.5 per cent for 2025-26. The World Bank, too, has raised India’s GDP growth forecast to 6.5 per cent for FY26 from its earlier projection of 6.3 per cent in June, and then to 6.3 per cent for FY27. Significantly enough, India’s projected growth of above six per cent remains well ahead of the global average, according to the IMF. This is attributed to the country’s resilient domestic demand, strong rural recovery, improved agricultural output along with strong manufacturing and services sector and the recent tax reforms. If one were to go by the IMF report, India will continue to be a key driver of growth among emerging markets and developing economies.
Compared with the July WEO update, the 2025 growth projection for India is revised upward due to carryover from a strong first quarter, which more than offsets the impact of increased US effective tariff rates on imports from India since July. Compared with the pre-tariff forecast in October 2024, India’s growth is projected to be cumulatively 0.2 percentage points lower. Inflation readings in India surprised on the downside relative to WEO projections. Monetary policy projections for India are consistent with achieving the Reserve Bank of India’s inflation target over the medium term. “India is noted as one of the countries where 2025 projected primary deficits are lower than before the pandemic, unlike many other major economies,” the IMF said.
While numbers do tell their own tale. But the world environment continues to be volatile. There are no two views on that. A number of new imponderables are getting added to the global trading order in the wake of an unpredictable Trump dispensation, which keeps resetting the trading regime constantly using the tariff wand. At the moment, however, the numbers are encouraging for India. New Delhi will have to do all that it takes to keep the momentum going.