IMF raises India’s 2025 growth forecast to 7.3%, expects moderation in 2026-27

January 19, 2026

Washington: The International Monetary Fund (IMF) raised India’s economic growth projection for 2025 by 0.7 percentage points to 7.3%, citing robust performance in the second half of 2025. The revision reflects better-than-expected outcomes in the third quarter and strong momentum in the fourth quarter, underscoring India’s position as one of the fastest-growing major economies globally.

Growth expected to moderate in 2026-27

The IMF projects that India’s growth will ease to 6.4% in 2026 and 2027 as cyclical and temporary factors subside. Despite the moderation, India remains a key driver of expansion among emerging market and developing economies, which are expected to grow at just over 4% in the same period.

Inflation trends and global risks

Inflation in India is expected to return to near-target levels in 2025, supported by subdued food prices, which will bolster domestic demand. However, the IMF cautioned that global risks, including reassessments of AI-driven productivity gains and potential tightening of financial conditions, could affect emerging economies. Conversely, faster adoption of artificial intelligence could lift global growth if productivity gains are realised and financial risks remain contained.