IMF sees India bucking global slowdown, raises 2026 growth forecast to 7%

The International Monetary Fund (IMF) on Tuesday, raised India’s growth forecast for 2026 to 7% from 6.4% projected in July, citing stronger-than-expected momentum, resilient domestic demand and robust services activity despite higher oil prices.

The IMF’s latest assessment also sets India apart from several energy-importing emerging economies facing a weaker medium-term outlook.

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“India stands out with upward revisions,” the IMF said in its October 2026 World Economic Outlook, pointing to growing evidence of stronger growth potential.

The IMF projected global output to expand at an average annual pace of 3.2% in 2028–31, below the pre-pandemic average of 3.7% recorded during 2000–19.

It said medium-term downgrades were concentrated among economies directly affected by the Middle East conflict and energy-importing emerging and developing economies, with India an exception.

Domestic demand drives latest upgrade

The Fund raised its India growth forecast for 2026 by 0.6 percentage points from its July outlook and 0.5 percentage points from April. Its projection for 2027 was also revised upwards to 7%, up 0.3 percentage points from July and 0.5 percentage points from April.

These upgrades add to a growing consensus among global forecasters that India’s economy is proving more resilient than expected, following stronger-than-anticipated growth in the first quarter. The World Bank and the OECD have also raised their forecasts, while other major agencies expect the economy to expand at around 7%.

The Fund attributed the stronger outlook to resilient domestic demand and robust services activity, which have helped cushion the economy against higher global oil prices.

“The region (Asia) has been incredibly resilient, even though its economies are net importers of energy and other commodities. The AI boom has more than offset the headwinds from commodity markets, with China and India emerging as the big engines of growth,” said Silvana Tenreyro, IMF economic counsellor and director of the Research Department.

Tenreyro said the Fund had revised its growth forecasts for both China and India upwards, with India receiving a sizeable upgrade.

China’s growth is projected to ease to 4.5% in 2026 and 4% in 2027, as higher oil prices, prolonged uncertainty and structural headwinds weigh on economic activity.

India bucks weaker medium-term trend

The Fund linked India’s improved outlook to sustained economic momentum and stronger growth potential, supported by favourable demographic dynamics, a growing domestic market and structural reforms.

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However, the brighter projections do not remove the risks facing the economy. Higher oil prices remain a vulnerability for India, while persistent global uncertainty could weigh on demand and growth.