IMF raises India’s FY26 growth forecast to 6.6% despite US tariff impact

IMF raises India’s FY26 GDP forecast to 6.6%, citing strong Q1 performance and resilient consumption

October 14, 2025

India remains global growth engine as GDP forecast rises to 6.6%

The International Monetary Fund (IMF) on Tuesday raised India’s GDP growth forecast for 2025–26 to 6.6 percent, up from its previous estimate of 6.4 percent, despite the impact of higher US tariffs on Indian exports.

In its latest World Economic Outlook report, the IMF attributed the upward revision to “carryover from a strong first quarter,” which it said more than offset the effects of the US tariff hikes implemented since July.

India’s economy expanded 7.8 percent in the April–June quarter of FY26 — the fastest pace in over a year — driven by robust private consumption and resilient domestic demand.

The government’s recent Goods and Services Tax (GST) reforms, which lowered rates on several consumer goods and services, are expected to further boost spending and cushion the economy against weaker export demand arising from the US tariff measures.

The IMF’s upgraded projection follows the World Bank’s recent move to raise India’s growth forecast for FY26 to 6.5 percent from 6.3 percent, underscoring the country’s continued economic momentum amid a challenging global environment.

Globally, the IMF projected growth in emerging markets and developing economies to moderate from 4.3 percent in 2024 to 4.2 percent in 2025 and 4 percent in 2026, citing trade policy uncertainty and weaker external demand.

“Beyond China, emerging market and developing economies more broadly showed strength, sometimes due to domestic factors, but recent signals point to a fragile outlook,” the IMF said.

IMF Managing Director Kristalina Georgieva recently described India as a “key growth engine” of the global economy, highlighting the country’s role amid a broader slowdown in global expansion.

“Global growth is forecast at roughly 3 percent over the medium term, down from 3.7 percent pre-pandemic. With China slowing, India continues to emerge as a central driver of world growth,” Georgieva said.

While acknowledging that decisive policy actions and private sector resilience have softened the blow of global tariff disruptions, she cautioned that “global resilience has not yet been fully tested” and warned that new economic challenges could emerge.

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