The International Monetary Fund (IMF) has predicted a drop in India’s GDP growth forecasting that it will decline to 6.4% from its estimate of 7.3% for 2025-26.
“Growth is projected to moderate to 6.4% in 2026 and 2027 as cyclical and temporary factors wane,” the IMF said in an update to its World Economic Outlook report.
The development came days after the World Bank retained its own forecast at 6.5%.
The IMF’s latest forecast is 20 basis points (bps) higher than its previous projection of 6.2% that was made in October.
Further, the 7.3% forecast for growth this year is 70 bps, higher than the 6.6% forecast that was made towards the end of the last calendar year. This upward revision, the IMF report said, was due to the better-than-expected outturn in the third quarter of the year and strong momentum in the fourth quarter.
Updating the base year and improving data coverage and methodologies are crucial to presenting the correct picture of the economy which changed over the years. Commenting further on the Indian economy, the IMF said.
Further, the IMF raised the 2026 global growth forecast by 20 bps to 3.3% and retained the projection for 2027 at 3.2%, noting that the steady performance on the surface was the result of divergent forces balancing out.
“Headwinds from shifting trade policies are offset by tailwinds from surging investment related to technology, including artificial intelligence (AI), more so in North America and Asia than in other regions, as well as fiscal and monetary support, broadly accommodative financial conditions, and adaptability of the private sector,” the IMF report said.
For China, the IMF gave a 30-bps upgrade for 2026 to 4.5%, with the 2027 forecast being pegged 20 bps lower at 4%.
It assumes an effective tariff rate of 18.5% for the US, slightly down from 18.7% in October.
“Economic policy uncertainty is assumed to remain elevated through 2026,” the IMF said.
Earlier this month, the Ministry of Statistics and Programme Implementation (MoSPI) pegged the first advance estimate of GDP growth for 2025-26 at 7.4%, which implied growth slowing down to 6.9% in the second half of the year from 8% in the first half.