India’s economy is set to grow 6.6% in FY2025–26, outpacing China and defying global slowdown fears, according to the International Monetary Fund’s latest World Economic Outlook.
The IMF’s upgraded forecast signals renewed confidence in India’s economic momentum, driven by strong domestic demand and a rebound in manufacturing and services. The 6.6% projection marks a significant upward revision from April and follows a solid 6.5% expansion in FY2024–25.
“The upward revision primarily reflects the carryover effect of a strong start to FY26,” the IMF said, noting that India’s Q1 performance offset the drag from recent US tariff hikes on Indian goods.
In contrast, China is expected to grow 4.8% next fiscal year, underscoring India’s lead among large economies. The IMF attributes India’s resilience to sustained consumer spending, rising private investment, and diversified trade strategies that blunted the impact of protectionist headwinds.
Still, the Fund trimmed India’s 2026 forecast to 6.2%, warning that early momentum may ease. The outlook aligns with the Indian government’s target range of 6.3–6.8% growth for FY2025–26.
Globally, the IMF projects a slowdown to 3.2% in 2025 and 3.1% in 2026, citing weaker trade and persistent geopolitical risks. Advanced economies are forecast to grow just 1.6%, while emerging markets average 4.2%. Spain leads developed nations with 2.9% growth, followed by the US at 1.9%.
Despite initial fears, the IMF said the tariff shock was “less severe than anticipated,” crediting India’s domestic strength and policy agility. “The effects of tariffs have been less severe than anticipated, thanks to resilient domestic demand and trade diversification,” the report noted.
The IMF urged governments to rebuild fiscal buffers, protect central bank independence, and intensify structural reforms. “Credible, transparent, and sustainable policy actions” are key to weathering ongoing global uncertainties, the report said.
