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IMF Boosts India's 2025 Growth Forecast to 7.3%, Cites Strong Momentum

The International Monetary Fund has sharply raised India's economic growth projection for 2025 to 7.3 percent, citing a stronger-than-expected performance in the second half of the year. The Fund expects growth to moderate to 6.4 percent in 2026 and 2027 as temporary factors fade. Inflation in India is projected to return to near target levels, driven by subdued food prices, which will support domestic demand. While global growth is expected to hold steady, supported by easing trade tensions and AI investment, the IMF cautions that risks to the outlook remain tilted to the downside.

Key Points: IMF Raises India's 2025 Growth Forecast to 7.3%

  • 2025 growth raised to 7.3%
  • Growth to ease to 6.4% in 2026-27
  • Inflation expected near target
  • Global growth steady at 3.3%
  • AI investment a key factor
2 min read

IMF raises India's 2025 growth to 7.3 pc

IMF projects India's economy to grow 7.3% in 2025, revising its forecast upward by 0.7 percentage points due to stronger-than-expected performance.

"better-than-expected outturn in the third quarter of the year and strong momentum in the fourth quarter - IMF World Economic Outlook Update"

Washington, Jan 19

The International Monetary Fund on Monday raised India's economic growth projection for 2025 by a sharp 0.7 percentage point to 7.3 per cent, citing stronger-than-expected performance in the second half of the year, even as it expects growth to moderate in the coming years.

In its World Economic Outlook Update, the IMF said the upward revision reflects a "better-than-expected outturn in the third quarter of the year and strong momentum in the fourth quarter," underscoring India's position as one of the fastest-growing major economies in the world.

The IMF projected that India's growth would ease to 6.4 per cent in 2026 and 2027 as cyclical and temporary factors wane.

Despite the expected moderation, India remains a key driver of growth among emerging market and developing economies, which the IMF said are projected to expand at just over 4 per cent in 2026 and 2027.

Emerging and developing Asia continues to benefit from strong technology-related investment and trade, even as global momentum becomes uneven.

The update noted that global growth is projected to hold steady at 3.3 per cent in 2026, supported by easing trade tensions, accommodative financial conditions and a surge in investment linked to technology, particularly artificial intelligence.

Inflation trends were also favourable for India. The IMF said inflation in India "is expected to go back to near target levels after a marked decline in 2025, driven by subdued food prices," offering additional support to domestic demand.

However, the IMF cautioned that risks to the outlook remain tilted to the downside. A reassessment of expectations around AI-driven productivity gains could lead to a pullback in investment and tighter global financial conditions, with spillover effects for emerging economies.

On the upside, the Fund said faster adoption of artificial intelligence could lift global growth, provided productivity gains materialise, and financial risks are contained.

- IANS

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Reader Comments

P
Priya S
Good to see the IMF acknowledging our strong performance. However, I hope this growth is inclusive. The benefits need to reach the common man - lower inflation, especially in food prices, is a very welcome sign mentioned here. That's what matters most to my family's budget.
R
Rohit P
The projection for moderation in 2026-27 is a bit concerning. We need to focus on sustainable drivers beyond just cyclical factors. Investment in AI and tech is crucial, but we must also strengthen our MSME sector, the backbone of our economy.
S
Sarah B
As someone working in the tech sector here, the emphasis on AI-driven investment is spot on. India has a massive opportunity to lead in this space. The caution about a potential pullback is wise though - the hype needs to translate into real productivity gains.
V
Vikram M
Being the fastest-growing major economy is a proud moment. But let's not get complacent. The global environment is still uncertain. We need to keep pushing for reforms in land, labour, and logistics to maintain this edge. Jai Hind!
K
Kavya N
The part about subdued food prices giving a boost to domestic demand is key. When aata, dal, and vegetables are affordable, middle-class families have more to spend on other things. That's real economic growth feeling. Hope this forecast holds true! 🙏
M
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