International Monetary Fund retains India's GDP growth forecast at 6.5% for FY26, FY27

ANI January 18, 2025 263 views

The International Monetary Fund has kept India's GDP growth forecast steady at 6.5% for fiscal years 2026 and 2027, despite a recent economic slowdown. While industrial activity has decelerated, India continues to hold the title of the world's fastest-growing economy. The IMF's report suggests resilience in India's economic potential, even amidst global economic uncertainties. The Finance Ministry remains cautiously optimistic about growth, particularly expecting improvements in the second half of the fiscal year.

"Growth in India is projected to be solid at 6.5 percent in 2025 and 2026" - International Monetary Fund
New Delhi, January 18: The International Monetary Fund (IMF) retained India's growth forcastat 6.5 per cent for for fiscal 2026 and fiscal 2027, the global economic body said in its World Economic Outlook report.

Key Points

1

IMF maintains steady growth forecast for India

2

Economy remains world's fastest growing despite slowdown

3

Global economic challenges impact trade projections

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Positive outlook for second half of fiscal year

The IMF added, "In India, growth is projected to be solid at 6.5 percent in 2025 and 2026, as projected in October and in line with potential."

The global body noted a slowdown in the Gross domestic product (GDP) growth rate adding that "growth in India also slowed more than expected, led by a sharper-than-expected deceleration in industrial activity."

India's economic growth slowed in the second qurter of the current fiscal as it expanded only by 5.4 per cent whereas in the second quarter the GDP growth rate was recorded at 6.7 per cent. The GDP growth rate in fiscal 2024 was recorded at 8.4. However, the economy still holds the tag of "world's fastest growing economy."

According to the November monthly economic review by the Finance Ministry, the fresh uncertainties have surfaced for global trade in the financial year 2026. However, despite the global challenges, the ministry in its report provides a cautiously optimistic outlook for India.

It predicts that growth in the second half of FY25 will be better than the first half.

It said, "After a moderation in Q2 of FY25, the outlook for Q3 appears bright, as reflected in the performance of HFIs for October and November 2024."

The report stated that the strong US dollar and potential policy rate adjustments in the United States are pressuring emerging market currencies.

On the international front, the IMF forecasted that global growth is projected at 3.3 percent in both 2025 and 2026, below the historical (2000-19) average of 3.7 percent.

The forecast for 2025 is broadly unchanged from that in the October 2024 World Economic Outlook (WEO), primarily on account of an upward revision in the United States offsetting downward revisions in other major economies, the Washington-based organisation added.

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