IMF Lowers India's FY27 GDP Growth Forecast
Context:
The International Monetary Fund (IMF), in its latest World Economic Outlook (WEO) report, has lowered its Gross Domestic Product (GDP) growth forecast for India for the fiscal year 2026-27 (FY27) by 20 basis points (bps) to 6.2%.
This adjustment follows a similar cut announced by the World Bank.
Comparative Growth Projections
The IMF's revised forecasts are lower than those of the Reserve Bank of India (RBI) for both the current and next fiscal years.
Institution
FY 2025-26
FY 2026-27
IMF
6.6%
6.2%
World Bank
6.5%
6.3%
RBI
6.8%
6.6%
Rationale for the Revision
Upward Revision for FY26:
The forecast for the current fiscal year (2025-26) was raised by 20 bps to 6.6%.
This is largely due to India's higher-than-expected growth of 7.8% in the first quarter.
This strong performance has offset the negative impact of increased US tariffs on Indian imports.
Downward Revision for FY27:
The forecast for the next fiscal year (2026-27) was lowered due to significant risks and uncertainty in trade policy.
A key concern is the 50% total tariff levied by the US on Indian goods, which could negatively impact India's growth outlook, especially without a bilateral trade agreement
Global Economic Outlook
The IMF has raised its global economic growth forecast for 2025 by 20 bps to 3.2%, but retained the forecast for 2026 at 3.1%.
United States: Growth forecast has been increased for both 2025 (to 2.0%) and 2026 (to 2.1%).
China: The growth forecast remains unchanged at 4.8% for 2025 and 4.2% for 2026.
The IMF notes that the decline in China's exports to the US has been partly offset by higher exports to the Euro area and ASEAN countries.