IMF raises India’s 2025 growth forecast to 7.3 percent amid global trade tensions – Firstpost

In its latest World Economic Outlook update released on Monday, the International Monetary Fund raised India’s growth forecast for 2025 by 0.7 percentage point to 7.3 per cent, citing stronger-than-expected corporate earnings in the December quarter and sustained momentum into the fourth quarter. The Fund mentioned the global economy has largely absorbed the immediate impact of recent tariff shocks.

Growth seen moderating after 2025

The IMF expects India’s growth to slow to 6.4 per cent in both 2026 and 2027, attributing the moderation to the fading of what it described as “cyclical and temporary factors”.

NSO revision supports upgrade

The IMF’s upward revision follows a recent update by the National Statistics Office, which raised its estimate for growth in the year ending March 31 to 7.4 per cent, above the government’s earlier projection of 6.3 percent to 6.8 per cent.

In the WEO report, the Fund reported the higher forecast for fiscal 2026 reflected a “better-than-expected outturn in the third quarter and strong momentum in the fourth quarter”.

STORY CONTINUES BELOW THIS AD

‘India a key growth engine’

“India is a key growth engine for the world,” IMF Communications Director Julie Kozack reported last week in a separate briefing, noting that the Fund had earlier projected growth of 6.6 percent for fiscal 2026 in its Article IV staff report.

Recovery after a difficult year

India’s improved outlook comes after a challenging period last year, when weaker corporate earnings weighed on economic activity and equity markets. The slowdown triggered foreign portfolio outflows and increased investor caution, alongside pressures from global trade tensions, elevated valuations and concerns over exports following US tariff measures.

Global economy shows resilience

At the global level, the IMF stated the world economy has shown unexpected resilience and is likely to withstand protectionist trade policies pursued by US President Donald Trump, supported by a surge in artificial intelligence-led investment across North America and Asia.

The Fund now projects global growth at 3.3 percent this year, unchanged from 2025 but higher than the 3.1 percent forecast it had made for 2026 in October.

More from World Is Trump planning a surprise military strike on Iran? Will Kamala Harris run again or will Biden-ties pull her down? Democrats want 2028 primaries early

“The world economy continues to show notable resilience despite significant US-led trade disruptions and heightened uncertainty,” IMF chief economist Pierre-Olivier Gourinchas and Tobias Adrian wrote in a blog post accompanying the report.

US outlook upgraded

The IMF also upgraded its outlook for the United States, forecasting growth of 2.4 percent this year, driven by the fastest pace of technology investment since 2001. This compares with its earlier projection of 2.1 percent for both this year and 2025.

India growth to ease beyond FY26

Despite near-term optimism, the IMF expects India’s growth to gradual to around 6.4 per cent in the two fiscal years after FY26 as cyclical factors fade. On a calendar-year basis, growth is forecast at 6.3 per cent in 2026 and 6.5 per cent in 2027.

While India’s underlying growth drivers remain strong, the Fund cautioned that the recent momentum may not be sustained indefinitely.

Downside risks persist globally

The IMF remarked risks to the global outlook remain tilted to the downside, with US tariffs and broader uncertainty likely to weigh on economic activity. However, it expects the drag on growth to ease gradually in 2026 and 2027.

Global growth is projected at 3.3 per cent in 2026 and 3.2 per cent in 2027, broadly in line with the estimated 3.3 per cent growth in 2025.

Inflation and oil prices offer relief

On inflation, the Fund stated value pressures in India are expected to move closer to the Reserve Bank of India’s target band of 2 percent to 6 percent, following a sharp decline in 2025 driven mainly by softer food prices.

It also noted that oil prices remain low and are likely to fall further due to weak demand growth and strong global supply, providing potential support to oil-importing countries such as India.

Quick Reads

View All

Will Kamala Harris run again or will Biden-ties pull her down? Democrats want 2028 primaries early

Govt as cupid? Thai party proposes matchmaking scheme to tackle low birth rate crisis

HomeWorldIMF raises India’s 2025 growth forecast to 7.3% amid global trade tensionsEnd of Article