IMF sees India’s growth dropping to 6.4% after strong 2025

The International Monetary Fund (IMF) has projected that India’s economic growth will moderate to 6.4% in 2026 and 2027, even as it raised the country’s growth estimate for 2025 to a robust 7.3% on the back of strong momentum in the second half of the year.

In its World Economic Outlook Update, the IMF said the moderation reflects the fading of cyclical and temporary factors that boosted growth in late 2025, despite India continuing to remain one of the fastest-growing major economies globally.

The Fund noted that the upward revision for 2025, a sharp 0.7% point increase, was driven by a better-than-expected performance in the third quarter and strong momentum in the fourth quarter.

Despite the expected slowdown, India is set to remain a key contributor to growth among emerging market and developing economies, which are projected to expand at just over 4% in 2026 and 2027, the IMF said.

The IMF also flagged easing inflationary pressures in India, stating that inflation is expected to return close to target levels after a marked decline in 2025, aided by softer food prices, which could help support domestic demand.

However, the Fund cautioned that global risks remain tilted to the downside, including a possible reassessment of artificial intelligence-driven productivity gains that could dampen investment and tighten financial conditions, with spillover effects for emerging economies.

At the global level, the IMF projected growth to remain steady at 3.3% in 2026, supported by easing trade tensions, accommodative financial conditions and technology-led investment.

(with inputs from syndicated feed)