The International Monetary Fund (IMF) has raised its growth forecast for the Indian economy to 7% for FY27, following similar upgrades by the Reserve Bank of India (RBI) and the World Bank last week. The IMF has revised its projection upwards by 60 basis points, citing resilient domestic demand and robust services activity.
The IMF has also raised its GDP growth estimate for FY28 by 30 basis points to 7%, according to its latest World Economic Outlook released on Tuesday.
“India remains among the fastest-growing major economies, with growth in 2026 projected at 7.0%,” the IMF said in its report, attributing the outlook to “stronger-than-expected momentum, supported by resilient domestic demand and robust services activity”.
On a calendar-year basis, the IMF expects India’s economy to grow by 7.4% in 2026 and 7% in 2027. The RBI and the World Bank have both raised their growth forecasts for India in FY27 to 7.1%, according to their latest projections.
On the inflation front, the IMF expects India’s consumer price index (CPI) inflation to average 5% in FY27 before easing to 4.4% in FY28. Its forecast for the current financial year is lower than the RBI’s latest estimate of 5.2%.
India stands out in medium-term outlook
The IMF expects India’s growth momentum to remain strong over the medium term, supported by favourable demographic dynamics, a large and expanding domestic market, and continued structural reforms.
“India stands out with upward revisions, reflecting sustained momentum and growing evidence of stronger growth potential supported by favorable demographic dynamics, a large and expanding domestic market, and continued structural reforms,” the report said.
While the medium-term outlook has weakened for several economies since January 2026, India has received upward revisions. Downgrades are concentrated among economies directly affected by the conflict in the Middle East and energy-importing emerging and developing economies elsewhere, excluding India.
The IMF projects global output to expand at an average annual pace of 3.2% between 2028 and 2031, below the pre-pandemic average of 3.7% recorded during 2000–2019.
The report said countries’ ability to adapt to geopolitical and technological changes would determine their medium-term growth potential. “Readiness to adopt AI and to reliably meet energy needs will be crucial,” it said, adding that countries more dependent on fossil fuels for power generation are more exposed to geopolitical shocks.
Global growth outlook remains uneven
The IMF has raised its global growth forecast for 2026 by 10 basis points to 3.1%, while retaining its projection for 2027 at 3.4%.
Advanced economies are projected to grow by 2.1% in 2026, compared with 2% in 2025. Growth in emerging market and developing economies is expected to slow to 3.7% in 2026 from 4.5% in 2025, before recovering to 4.4% in 2027, as per the report.
Within Asia, China’s growth is projected to slow to 4.5% in 2026 as higher global oil prices, persistent uncertainty and structural headwinds weigh on economic activity. Policy support is expected to prevent a sharper slowdown.
As per the report, global economic activity held up better than expected in the first half of 2026, although growth varied across countries. India continued to record robust growth, underpinned by domestic demand and services despite higher oil prices. China’s second-quarter growth, meanwhile, came in at 4.3% year-on-year.
The IMF, however, warned that “a prolonged stalemate or further escalation in the Middle East or Ukraine could make commodity prices higher and more volatile for longer”, exacerbating inflationary pressures. Further disruptions to major energy transit routes and supply chains remain key risks to the global outlook.