IMF Sees India Growth Steady at 6.5% in 2026 Despite Global Headwinds

In a group interview with reporters from India, Japan, the UAE, the Netherlands and Chile, Gourinchas said, "India has been doing very, very well in 2025," noting that growth is now estimated at "7.6 per cent" on a fiscal year basis.

He said momentum is expected to carry into the next year, with the IMF projecting growth of "6.5" per cent in 2026, reflecting a "very slight upgrade" from earlier estimates.

The revised outlook comes despite headwinds from the ongoing conflict in the Middle East, which has pushed up global energy prices and raised concerns for oil-dependent economies like India.

"There is an effect of the war in the Middle East that is weighing down, but it's more than offset by the momentum coming from 2025," he said.

Gourinchas also pointed to easing trade tensions between India and the United States as a supportive factor.

"Trade discussions between the US and India have reduced the uncertainty around the tariff... and reduced the level of the tariff," he said.

However, the IMF expects inflationary pressures to pick up in India in the coming year. "We are seeing an increase in inflation for 2026 to 4.7 per cent," he said, attributing it partly to higher global energy prices and rising food costs.

"We've seen food prices that have been picking up in the early 2026 in India," he added.

While near-term prospects remain stable, Gourinchas cautioned that India's structural dependence on energy imports poses a vulnerability in a volatile global environment.

"It's very energy dependent... it's very oil dependent as well," he said, warning that these factors could create "some headwinds going forward."

At the same time, he said India's current growth trajectory is broadly aligned with its long-term potential.

"We have kind of a potential growth level that is around 6.5 per cent," he noted.

The IMF's assessment underscores India's position as a key driver of global growth at a time when many economies are grappling with slowing expansion and rising uncertainty.

The global backdrop has become more challenging following the escalation of conflict in the Middle East, which has disrupted energy flows and contributed to higher oil and commodity prices.

The IMF has said the duration and intensity of the shock will determine its broader impact on the world economy.

As one of the fastest-growing major economies, India has sustained strong domestic demand and investment momentum in recent years, supported by policy stability and a resilient private sector.

- IANS