The International Monetary Fund (IMF) on Tuesday raised India’s gross domestic product (GDP) growth forecast by 0.2 percentage point to 6.4%, citing improved external environment.
In its July World Economic Outlook Update, the multilateral agency also revised upward India’s GDP growth estimate by 0.1 percentage point to 6.4% in FY27.
“In India, growth is projected to be 6.4% in 2025 and 2026, with both numbers revised slightly upward, reflecting a more benign external environment than assumed in the April reference forecast,” the IMF said in its update.
On a calendar year basis, India’s growth projections are 6.7% for 2025 and 6.4% for 2026, the agency said.
Global upgrade
The upward GDP growth revision for the country began with S&P Global Ratings on June 24, raising India’s growth projection to 6.5% for 2025-26, after cutting it to 6.3% in May. It revised the estimate assuming a normal monsoon, lower crude oil prices and monetary easing.
In April, the IMF had cut India’s growth projection by 30 basis points (bps) to 6.2% for FY26, citing higher trade tensions and global uncertainty.
India on track to become 4th-largest economy
In its latest forecast, the IMF said global growth is projected at 3% for 2025 and 3.1% in 2026. The forecast for 2025 is 0.2 percentage point higher than that in the reference forecast of April and 0.1 percentage points higher for 2026.
“This reflects stronger-than-expected front-loading in anticipation of higher tariffs; lower average effective US tariff rates than announced in April; an improvement in financial conditions, including due to a weaker US dollar; and fiscal expansion in some major jurisdictions,” the IMF said.
Global headline inflation is expected to fall to 4.2% in 2025 and 3.6% in 2026, a path similar to the one projected in April. The overall picture hides notable cross-country differences, with forecasts predicting inflation will remain above target in the US and be more subdued in other large economies.
In April, IMF data showed India will overtake Japan to become the fourth-largest economy in the world with a GDP of $4.187 trillion at current prices in 2025, marching ahead of Japan’s GDP of $4.186 trillion.
India’s GDP size was estimated to be $3.909 trillion in 2024, compared with Japan’s $4.026 trillion in 2024. India is estimated to become the third-largest economy by 2027 by overtaking Germany.