The International Monetary Fund (IMF) has projected that India will remain one of the world’s fastest-growing major economies in the coming years. In its latest World Economic Outlook (WEO) report, the IMF forecasted India’s GDP growth at 6.6% for 2025-26, significantly higher than China’s 4.8%. The strong performance in the first quarter of FY26 helped offset the impact of higher tariffs imposed by the United States, underscoring India’s resilient economy.
India Set to Outpace China
According to the IMF, India’s growth is being driven by domestic consumption, a manufacturing boom, and a thriving services sector. While growth is expected to moderate slightly to 6.2% in 2026, the current forecast reflects a strong start to FY26 rather than direct benefits from tariff measures. For reference, India’s GDP grew 6.5% in FY25, and the government has set a target of 6.36% for FY26.
Global Context
The IMF projects global GDP growth at 3.2% in 2025 and 3.1% in 2026, down slightly from 3.3% in 2024. Developed economies are expected to grow at only 1.6%, while emerging markets will average 4.2%. Among advanced economies, Spain (2.9%) and the U.S. (1.9%) will lead growth, whereas Japan (1.1%) and Canada (1.2%) are projected to lag.
Tariff Impact Less Severe Than Feared
Despite concerns, the IMF notes that the U.S. tariffs on India and China have had a milder impact than expected. Strong domestic demand, a surge in manufacturing, and private investment helped cushion the effect, while trade diversification and local consumption reduced the blow.
Inflation and Risks
Global inflation is gradually declining, though unevenly. Price pressures remain in the U.S., while many countries see controlled inflation. The IMF warned that prolonged uncertainty, protectionism, and labor market shocks could hinder growth if not addressed.
IMF Recommendations
To sustain growth, the IMF urged governments to restore fiscal discipline, maintain central bank independence, and implement structural reforms. It also emphasized increased trade and policy coordination to counter the impact of tariffs and supply chain disruptions.
