The International Monetary Fund (IMF) has upgraded India’s GDP growth projection for FY27 to 6.5%, raising it by 0.1 percentage point from its January 2026 estimate of 6.4%, in its April 2026 World Economic Outlook (WEO) titled Global Economy in the Shadow of War.
Growth is expected to hold steady at 6.5% in FY28 as well, the fund said, making India one of the few large economies to receive an upward revision in a report otherwise dominated by downgrades tied to the ongoing war in the Middle East.
The IMF attributed the revision to three factors: strong carryover momentum from FY26, a reduction in US tariffs on Indian goods from 50% to 10%, and sustained domestic demand strength.
What’s driving the upgrade
“For 2026, growth is revised upward moderately by 0.3 percentage point (0.1 percentage point relative to January) to 6.5%, led by positive contributions from the carryover of the strong 2025 outturn and the decline in additional US tariffs on Indian goods from 50 to 10%, which outweigh the adverse impact of the Middle East conflict. Growth is projected to stay at 6.5% in 2027,” the document states.
“In India, growth for 2025 is revised upward by 1.0 percentage point relative to October, to 7.6%, reflecting the better-than-expected outturn in the second and third quarters of the fiscal year and sustained strong momentum in the fourth quarter,” it added.
The fund noted that these positives outweigh the adverse spillover effects of the Middle East conflict on India’s economy.
On inflation, the IMF expects India’s price pressures to normalise after food-driven softness in FY26, returning closer to the Reserve Bank of India’s 4% target over the forecast horizon.
Global outlook darkens
At the global level, the April 2026 WEO paints a markedly different picture from the January update.
The Middle East war, which has disrupted approximately 13% of global daily oil supply and 20% of LNG flows through the Strait of Hormuz, is dragging down growth across emerging markets and pushing inflation higher. IMF Managing Director Kristalina Georgieva noted that even the most optimistic scenario now involves a growth downgrade, given infrastructure damage, supply disruptions, and confidence losses caused by the conflict.
The IMF states, “global inflation is projected to pause its decline, with headline inflation increasing from 4.1% in 2025 to 4.4% in 2026 before falling back to 3.7% in 2027. This is a 0.7 percentage point upward revision in 2026 from the figure in the October 2025 WEO, reflecting higher energy and food prices.
”