NEW DELHI: The International Monetary Fund (IMF) on Tuesday raised its forecast for India’s GDP growth in the current financial year by 60 basis points to 7.0%, becoming the latest major global organization to upgrade the view on India’s economy.
Since last month, several global organisations such as the Asian Development Bank and Organisation for Economic Co-operation and Development raised India’s growth projections.
The World Bank and the Reserve Bank of India both last week raised India’s GDP growth projection for FY27 to 7.1%.
India remains among the fastest-growing major economies, the IMF said in its latest World Economic Outlook. “This reflects stronger-than-expected momentum, supported by resilient domestic demand and robust services activity,” the Fund said.
The IMF also raised the GDP growth forecast for FY28 by 30 basis points to 7.0%. The Indian economy had grown 7.8% in FY26 and in the April-June quarter of FY27.
India stands out among emerging market economies with upward revisions, which reflects sustained momentum, the IMF said. Faster growth this year is also reflective of the growing evidence of stronger growth potential supported by favourable demographic dynamics, a large and expanding domestic market, and continued structural reforms, the IMF said.
The IMF projected CPI inflation in India to average 5.0% in FY27 and then moderate to 4.4% in FY28. The Fund’s inflation forecast is lower than RBI’s, which last week raised its inflation projection by 20 basis points to 5.2%. CPI inflation rose to a near 2-year high of 5.54% in September.
The Fund also seen India’s current account deficit (CAD) widening to 1.5% of GDP in FY27 from 0.7% in FY26. The CAD is then seen easing to 1.3% in FY28, as per IMF’s projections. Economists sees India’s CAD widening this financial year because of higher energy import bill caused by the surge in global crude oil prices and large foreign portfolio investment outflows.
The Fund raised the global growth projection by 10 basis points to 3.1% for 2026, while it left the forecast unchanged for 2027 growth at 3.4%.
“Two major transformative forces—geopolitics and technology—are reshaping the global economy, with their short-term impact gradually coming into view and their longer-term impact still largely unknown,” the IMF said in the report.
Growth in advanced economies is expected to slightly rise to 2.1% in 2026 from 2.0% in 2025. The latest growth forecast for advanced economies is 40 basis points higher than the July projection.
“Outcomes remain uneven within the group: Net energy exporters are partly cushioned by favorable terms-of-trade effects, whereas net energy importers experience a more pronounced drag from higher energy prices unless their economies are lifted by technology-related activity,” the Fund said.
In the US, growth is projected at 2.3% in 2026, unchanged from the July forecast, while Euro Area growth forecast for the current calendar year was raised by 20 basis points to 1.1%.
In emerging market and developing economies, growth is projected to slow from 4.5% in 2025 to 3.7% in 2026 before recovering to 4.4% in 2027, the IMF said.
“The outlook is heterogeneous, reflecting differences in commodity dependence, geographic exposure to the Middle East conflict, remittances and tourism receipts, financial conditions, policy frameworks, and position in the global technology value chain,” the Fund said.
China is seen growing 4.5% in 2026, 10 basis points slower than previously projected and also slower than the 5% growth seen in 2025. China’s 2026 growth is projected to slow down as higher global oil prices, together with protracted uncertainty and structural headwinds, are expected to weigh on activity, the Fund said.
Source: The Financial Express
