IMF upped India’s GDP growth to 7.3% for FY26
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Julia Nikhinson
International Monetary Fund (IMF) on Monday upped India’s growth estimates by 70 basis points to 7.3 per cent for 2025. This is tad lower than government’s estimate of 7.4 per cent but at par with RBI’s headline number of 7.3 per cent.
“In India, growth is revised upward by 0.7 percentage point to 7.3 percent for 2025, reflecting the better-than expected outturn in the third quarter of the year and strong momentum in the fourth quarter,” IMF said in its latest update to World Economic Outlook.
Growth is projected to moderate to 6.4 per cent in 2026 (2026-27) and 2027 (2027-28) as cyclical and temporary factors wane. Inflation is expected to go back to near target levels after a marked decline in 2025 driven by subdued food prices.
Last month, RBI revised the growth estimates by 50 basis points to 7.3 per cent. It had said that domestic factors such as healthy agricultural prospects, continued impact of GST rationalisation, benign inflation, healthy balance sheets of corporates and financial institutions and congenial monetary and financial conditions should continue to support economic activity. Continuing reform initiatives would further facilitate growth.
On the external front, services exports are likely to remain strong, while merchandise exports face some headwinds. External uncertainties continue to pose downside risks to the outlook, while speedy conclusion of various ongoing trade and investment negotiations present upside potential, it said while adding that the risks are evenly balanced.
At the same time, the Asian Development Bank (ADB) raised estimates by 70 basis points to 7.2 per cent. India’s FY26 growth projection is upgraded, “driven primarily by robust domestic consumption supported by recent tax cuts,” ADB said in the latest Asian Economic Outlook.
Global Economy
IMF said global economy is projected to remain resilient at 3.3 per cent in 2026 and at 3.2 per cent in 2027: rates similar to the estimated 3.3 per cent outturn in 2025. The forecast marks a small upward revision for 2026 and no change for 2027 compared with that in the October 2025 World Economic Outlook (WEO).
This steady performance on the surface results from the balancing of divergent forces. “Headwinds from shifting trade policies are offset by tailwinds from surging investment related to technology, including artificial intelligence (AI), more so in North America and Asia than in other regions, as well as fiscal and monetary support, broadly accommodative financial conditions, and adaptability of the private sector,” it said.
A blog by IMFs’ Tobias Adrian and Pierre-Olivier Gourinchas said that global growth has been impressively resilient amid trade disruptions, but this masks underlying fragilities tied to the concentration of investment in the tech sector. And the negative growth effects of trade disruptions are likely to build up over time. AI-driven investment offers transformative potential—but also introduces financial and structural risks that demand vigilance.
“The challenge for policymakers and investors alike is to balance optimism with prudence, ensuring that today’s tech surge translates into sustainable, inclusive growth rather than another boom-bust cycle. This is especially relevant in an environment marked by intensifying geopolitical strains and growing threats to institutional frameworks which make the implementation of good policies more challenging,” it said.
Published on January 19, 2026
