The International Monetary Fund has raised India’s economic growth projection for 2025 to 7.3 per cent, marking a significant upward revision and reinforcing the country’s position as one of the world’s fastest-growing major economies.
In its latest World Economic Outlook update, the IMF attributed the revision to stronger-than-anticipated economic performance in the second half of the year, particularly a better-than-expected outcome in the third quarter and sustained momentum through the fourth quarter. The assessment reflects improving domestic demand, resilient consumption, and steady investment activity.
While maintaining a positive outlook for the near term, the Fund expects India’s growth to moderate to 6.4 per cent in 2026 and 2027 as temporary and cyclical factors gradually fade. Even with this moderation, India is projected to remain a leading contributor to growth among emerging market and developing economies, which are forecast to expand at just over 4 per cent during the same period.
The IMF highlighted that emerging and developing Asia continues to benefit from robust technology-related investment and trade, even as global economic momentum shows signs of unevenness. On the global front, overall growth is expected to remain steady at 3.3 per cent in 2026, supported by easing trade frictions, accommodative financial conditions, and increased investment linked to advanced technologies, including artificial intelligence.
Inflation dynamics in India were also seen as supportive. The Fund noted that inflation is expected to return close to target levels following a sharp decline in 2025, driven largely by softer food prices. This trend is likely to provide further support to domestic demand and macroeconomic stability.
At the same time, the IMF cautioned that risks to the global outlook remain tilted to the downside. A reassessment of expectations surrounding artificial intelligence–led productivity gains could result in weaker investment and tighter financial conditions, with potential spillover effects for emerging economies.
On the upside, the Fund observed that faster and broader adoption of artificial intelligence could lift global growth, provided productivity gains are realised and financial risks remain contained.
