India GDP growth forecast: What to know about IMF’s FY27 and FY28 outlook

The International Monetary Fund (IMF) has projected India’s economy to grow by 7 per cent in both FY27 and FY28, citing stronger-than-expected economic momentum, resilient domestic demand and robust services activity.

However, the Fund has warned that rising energy and food prices, geopolitical uncertainty and potential disruptions to trade and investment pose risks to the global economy.

Here is what to know about the IMF’s India growth forecast, its global economic projections and the risks highlighted in its October 2026 World Economic Outlook.

Key points

• India’s growth forecast: The IMF projects economic growth of 7 per cent in both FY27 and FY28.
• Global growth: The world economy is expected to grow by 3.1 per cent in 2026 and 3.4 per cent in 2027.
• Global inflation: Inflation is projected to rise to 4.7 per cent in 2026 before easing to 4.1 per cent in 2027.
• Major risks: Higher energy and food prices, geopolitical tensions in the Middle East, trade pressures and uncertainty surrounding artificial intelligence-related investment could weaken global growth.

Why the IMF expects India to grow by 7 per cent

In its October 2026 World Economic Outlook, the IMF attributed India’s growth outlook to stronger-than-expected momentum, resilient domestic demand and robust services activity.

India remains among the fastest-growing major economies. However, the Fund cautioned that the global economy’s resilience is becoming increasingly fragile and uneven.

“The global economy remains resilient, but that resilience is becoming more fragile and more uneven,” the IMF said.

The Fund projects global economic growth of 3.1 per cent in 2026 and 3.4 per cent in 2027. It expects global inflation to rise to 4.7 per cent in 2026, driven largely by higher energy and food prices, before easing to 4.1 per cent in 2027.

Global economic outlook faces growing risks

The impact of the energy shock varies across countries, depending on their exposure to the conflict in the Middle East, commodity prices and the strength of technology-related investment.

The IMF said the global economy had withstood repeated shocks partly because of flexible energy supplies, increased production in other countries, the use of inventories and a shift towards alternative energy sources. Investment linked to artificial intelligence has also supported economic activity and international trade.

However, the Fund warned that these sources of support might not be sufficient if disruptions persist. Dwindling energy inventories, further geopolitical shocks and prolonged uncertainty could weaken confidence and economic activity.

“Risks are skewed to the downside,” the report said, warning that a prolonged stalemate or further escalation in the Middle East could keep energy and food prices elevated, revive inflationary pressures and weaken growth.

What the IMF expects for global trade

The report projects world trade volume growth to slow in 2026 and stabilise in 2027. The outlook reflects the impact of tariffs, adjustments in production chains and continued strength in technology-related trade.

The IMF also expects global imbalances to decline only modestly over the medium term. Large fiscal deficits, limited domestic rebalancing, technology-driven capital flows and differing demand patterns across major economies are expected to continue sustaining external gaps under current policies.

“Global imbalances are expected to decline only modestly over the medium term, as large fiscal deficits, limited domestic rebalancing, technology-driven capital flows, and differing demand compositions across major economies under current policies continue to sustain external gaps,” the report added.

Why artificial intelligence investment is a concern

The IMF highlighted the risk of a sharp reassessment of returns from artificial intelligence-related investments. Such a shift could reduce investment, trigger equity market corrections and tighten financial conditions.

The report also highlighted the need for economies to rebuild policy buffers and strengthen their ability to withstand future shocks. Higher borrowing costs and elevated public debt are limiting governments’ room to respond to economic disruptions.

While India’s growth outlook remains strong, the IMF’s projections underline the risks facing the wider global economy, particularly from geopolitical uncertainty, higher energy and food prices, trade pressures and potential changes in technology-related investment.