New Delhi: The International Monetary Fund (IMF) boosted its forecast for India’s GDP growth from 6.4% to 6.6% for 2025–26 on Tuesday. This is a strong vote of confidence in India’s economic momentum, even though the country is dealing with the effects of rising US tariffs on its exports.
The IMF’s current World Economic Outlook report says that the change is due to “carryover from a strong first quarter, more than offsetting the increase in the US effective tariff rate on imports from India since July.”
India’s economy grew by 7.8% in the April–June quarter of FY26, one of its strongest growth rates in recent quarters. This was due to strong private consumption and stable domestic activity. The economy has a strong base to keep going for the rest of the fiscal year thanks to a good first quarter.
The Indian government’s comprehensive products and Services Tax (GST) changes, which include lowering tax rates on consumer products and services, are also likely to increase domestic demand. Economists think that India’s strong internal economy could help protect it from the negative effects of lower demand from other countries after the US raised tariffs on Indian exports.
The IMF’s most recent report came just after the World Bank raised its forecast for India’s growth rate for FY26 from 6.3% to 6.5%, citing robust macroeconomic fundamentals and steady private sector investment.
The IMF did, however, predict that growth in emerging market and developing economies would slow down a little bit, from 4.3% in 2024 to 4.2% in 2025, and then to 4% in 2026.
The research said, “Emerging markets and developing economies outside of China also showed strength, sometimes for specific domestic reasons. However, recent signals point to a weak outlook there as well.”
It also said that increasing US tariffs are hurting demand from outside the US and that rising uncertainty about trade policy is still hurting investment in major export-led economies.
Last week, Kristalina Georgieva, the Managing Director of the IMF, praised India as one of the main drivers of global growth. She said that India’s strong performance is helping to stabilize global growth despite ongoing geopolitical and economic problems.
“Global growth is expected to be about 3% over the next few years, down from 3.7% before the pandemic.” “Global growth patterns have been changing over the years, especially with China slowing down steadily and India becoming a key growth engine,” Georgieva added.
She said that while certain economies have been able to adjust and bounce back thanks to strong private sectors and decisive policy decisions, the world can’t yet “heave a big sigh of relief.”
“Global resilience has not yet been put to the test. And there are indicators that the test may come, she said, pointing to trade tensions and rising prices in key economies.
Even though the world is uncertain, India’s strong domestic fundamentals, structural reforms, and growth driven by consumption continue to make both foreign financial institutions and investors optimistic.