The International Monetary Fund (IMF) has maintained its growth forecast for India, predicting a 6.5% growth rate for the next two financial years (FY26 and FY27), citing that it is “in line with potential”. “Growth in India had slowed more than expected, led by a sharper-than-expected deceleration in industrial activity,” said IMF in its World Economic Outlook (WEO) update. International Monetary Fund also referred to the 5.4% growth in the September quarter.

The IMF predicts a 6.5% growth rate for India, while the World Bank expects a slightly higher rate of 6.7%. According to the World Bank, India will remain the fastest-growing major economy for the next two years.

“India is projected to maintain the fastest growth rate among the world’s largest economies, at 6.7% in both FY26 and FY27. The services sector is expected to enjoy sustained expansion, and manufacturing activity is anticipated to strengthen, supported by government initiatives to enhance logistics infrastructure and improve the business environment through tax reforms,” said the World Bank in its flagship Global Economic Prospects report.

What Else Did The IMF Said?

The IMF predicts that the world’s economy will grow at a steady rate of 3.3% in 2025 and 2026, which is similar to its expected growth rate after being impacted by the pandemic. “The forecast for 2025 is broadly unchanged from that in the October 2024 WEO, primarily on account of an upward revision in the United States offsetting downward revisions in other major economies,” said the IMF.

Furthermore, IMF revised the growth projections for China in the calendar year 2025 upwards by 0.1 percentage points to 4.6%. “This revision reflects carryover from 2024 and the fiscal package announced in November, which largely offsets the negative effect on investment from heightened trade policy uncertainty and the property market,” said IMF.

“Growth could suffer in both the near and medium term, but at varying degrees across economies,” said the International Monetary Fund.

The International Monetary Fund warns that besides economic policy changes, ongoing global conflicts could worsen, causing prices of essential goods like food and fuel to rise again. “The conflicts in the Middle East and Ukraine could worsen, directly affecting trade routes as well as food and energy prices. Commodity-importing countries may be particularly affected, with the stagflationary impact of higher commodity prices compounded by an appreciating dollar,” added IMF.

On a positive note, the IMF said the global economy could improve if new governments can successfully renegotiate trade agreements and create new ones.

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