India to buck global slowdown and grow 7% for two years – IMF

The country is expected to remain the fastest-growing major economy despite higher oil prices and the Middle East conflict

India will be the world’s fastest-growing major economy despite the drag from higher oil prices and slowing global growth, the International Monetary Fund has said.

The IMF raised India’s GDP forecast for 2026-27 to 7%, from its July figure of 6.4%, in its latest World Economic Outlook released on Tuesday. It also upgraded its growth projection for the country in 2027-28 to 7%, from the previous 6.7%.

The upgrade reflects stronger-than-expected economic momentum, supported by domestic demand and services activity. India’s expanding domestic market, favorable demographics, and continued structural reforms have also strengthened its growth potential, the IMF said.

The Indian economy expanded 7.8% in the financial year ended March 2026, and maintained the same pace in the April-June quarter. The latest revision follows similar upgrades by other major institutions. The World Bank raised India’s growth forecast for 2026-27 to 7.1% last week, citing strong domestic demand and exports. The Reserve Bank of India (RBI) also increased its projection for the current financial year to 7.1%.

India’s expansion is also supporting growth across South Asia, where the World Bank expects the country to remain a major driver of regional economic activity.

The upgraded Indian outlook contrasts with slower global growth. The IMF expects the world economy to expand 3.1% in 2026, down from 3.5% last year.

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China’s economy is projected to grow 4.5% this year, while the US is expected to grow 2.3%.

The Middle East conflict continues to weigh on energy-importing economies, while investment in AI infrastructure has helped support global growth, the IMF said.

Inflation remains a concern in India, with consumer prices rising 5.54% in September, close to the RBI’s upper tolerance limit of 6%. The central bank raised its benchmark interest rate to 5.5% last week amid broader price pressures.

The IMF also expects India’s current account deficit to widen to 1.5% of GDP this financial year from 0.7% a year earlier amid higher energy import bills.