IMF raises India’s 2025/26 growth forecast to 6.6% despite impact of US tariffs

International Monetary Fund (IMF) on Tuesday revised upwards India’s GDP growth forecast for the current fiscal to 6.6 per cent compared to its earlier estimate of 6.4 per cent on the back of strong growth, offsetting the impact of US tariffs on Indian shipments.

In its latest World Economic Outlook (WEO), the multilateral lending agency also lowered the growth forecast by 20 basis points to 6.2 per cent for 2026-27.

“Compared with the July WEO Update, this is an upward revision for 2025, with carryover from a strong first quarter more than offsetting the increase in the US effective tariff rate on imports from India since July, and a downward revision for 2026,” the report said.

The Indian economy grew by 7.8 per cent in April-June – the highest in five quarters – before the disruptive US tariffs were imposed.

Earlier this month, the World Bank also raised India’s growth forecast for the current fiscal to 6.5 per cent from 6.3 per cent estimated earlier, saying the country is expected to remain the fastest-growing major economy.

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In July, the IMF revised its forecast for India’s economic growth to 6.4 per cent for both 2025 and 2026. In its April 2025 World Economic Outlook, it had projected the country’s economic growth at 6.2 per cent for 2025 and 6.3 per cent for 2026.

The IMF further said global growth is projected to slow from 3.3 per cent in 2024 to 3.2 per cent in 2025 and to 3.1 per cent in 2026.

This is an improvement relative to the July WEO Update - but cumulatively 0.2 percentage point below forecasts made before the policy shifts in the October 2024 WEO, with the slowdown reflecting headwinds from uncertainty and protectionism, even though the tariff shock is smaller than originally announced.

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For emerging market and developing economies, the IMF said the growth is projected to moderate from 4.3 per cent in 2024 to 4.2 per cent in 2025 and 4 per cent in 2026.