Washington: The International Monetary Fund (IMF) on Monday revised India’s economic growth forecast for 2025 upward by a significant 0.7 percentage point to 7.3 per cent, citing stronger-than-anticipated economic performance in the latter half of the year. However, the global lender expects growth to moderate in subsequent years.
In its World Economic Outlook Update, the IMF said the revision reflects a “better-than-expected outturn in the third quarter and strong momentum in the fourth quarter,” reinforcing India’s status as one of the world’s fastest-growing major economies.
According to the IMF, India’s growth rate is projected to slow to 6.4 per cent in both 2026 and 2027 as cyclical and temporary growth drivers begin to fade.
Despite this moderation, India is expected to remain a major contributor to growth among emerging market and developing economies, which the IMF forecasts will expand at just over 4 per cent in 2026 and 2027. Emerging and developing Asia, in particular, continues to benefit from robust technology-related investment and trade, even as global growth momentum becomes uneven.
The IMF also noted that global economic growth is expected to remain stable at 3.3 per cent in 2026, supported by easing trade tensions, accommodative financial conditions, and a surge in technology-driven investment, especially in artificial intelligence.
On inflation, the Fund offered a positive outlook for India, stating that inflation is “expected to return close to target levels after a sharp decline in 2025,” largely due to subdued food prices. This trend is likely to provide further support to domestic demand.
However, the IMF warned that downside risks persist. A reassessment of expectations surrounding AI-led productivity gains could result in reduced investment and tighter global financial conditions, potentially affecting emerging economies.
On the positive side, the Fund noted that faster and more effective adoption of artificial intelligence could boost global growth, provided productivity gains materialise and financial risks remain contained.
With inputs from IANS