IMF raises India's growth forecast to 7% for 2026, upgrades outlook by 60 BPS

The International Monetary Fund (IMF) has raised its growth projection for India to 7% for 2026, an upward revision of 0.6 percentage point from its July 2026 forecast, citing stronger-than-expected economic momentum supported by resilient domestic demand and robust services activity.

The latest World Economic Outlook, titled Resilience Under Strain, Urgent Choices, places India among the fastest-growing major economies even as the global economy faces the impact of the Middle East conflict, higher energy prices and uncertainty over the outlook.

The IMF’s baseline projection for India’s growth in 2026 is 7%, compared with 7.8% in 2025. It has retained the growth forecast at 7% for 2027. The 2026 projection is also 0.5 percentage point higher than the IMF’s April 2026 forecast, while the 2027 estimate has been raised by 0.5 percentage point from April.

On a calendar-year basis, the IMF projects India’s growth at 7.4% in 2026 and 7% in 2027.

The upward revision comes against a weaker outlook for several other emerging market and developing economies. The IMF projects growth in this group to slow from 4.5% in 2025 to 3.7% in 2026, before recovering to 4.4% in 2027. Within emerging and developing Asia, China’s growth is projected to slow to 4.5% in 2026, with higher global oil prices, prolonged uncertainty and structural headwinds weighing on activity.

The IMF attributes India’s stronger outlook to domestic demand and services activity. It does not, however, suggest that India is insulated from the global energy shock. The report warns that the effects of higher energy prices vary according to countries’ exposure to the conflict and their position as energy exporters or importers.

Its baseline assumes the Strait of Hormuz will reopen in March 2027, with a broad return to prewar conditions by October 2027. The IMF expects energy prices to remain above prewar levels, while shortages could emerge in some emerging market and developing economies that lack inventories and face competition for available cargoes.

The broader global outlook remains subdued. World output is projected to expand by 3.1% in 2026, down from 3.5% in 2025, before recovering to 3.4% in 2027. The IMF says the aggregate figures mask significant differences between economies, with growth increasingly shaped by exposure to the war-induced supply shock and demand linked to the global technology cycle.