IMF lifts India FY26 growth outlook to 7.3%, flags slowdown thereafter

The International Monetary Fund has raised its forecast for India’s economic growth in fiscal 2026 by 0.7 percentage points to 7.3%, citing strong momentum, while projecting a slower pace of expansion in the following two fiscal years as cyclical factors ease.

The upward revision follows an update earlier this month by India’s National Statistics Office, which raised its estimate for growth to 7.4% for the year ending March 31, compared with the government’s initial projection of between 6.3% and 6.8%.

In its World Economic Outlook report released on Monday, the IMF said the revision for fiscal 2026 reflected a “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% in its Article IV staff report.

For calendar years 2026 and 2027, the IMF forecast India’s growth at 6.3% and 6.5%, respectively.

The IMF said global growth is expected to remain steady, with slowing momentum in high-technology sectors partly offsetting weakness in other areas.

Risks remain tilted to the downside, the Fund said, as U.S. tariffs and global uncertainty are expected to weigh on activity, although the drag on growth should ease in 2026 and 2027.

The IMF projected global growth at 3.3% in 2026 and 3.2% in 2027, broadly in line with an estimated outturn of 3.3% in 2025.

It added that oil prices remain low and are expected to fall further due to weak demand growth and strong supplies.

In India, inflation is expected to move back towards target levels after a sharp decline in 2025 driven by subdued food prices, the IMF said, referring to the Reserve Bank of India’s inflation target band of 2% to 6%.

(With inputs from agencies)