IMF Increases India's Economic Growth Forecasts to 6.5% in FY27, Reduces Global Projections

The International Monetary Fund (IMF) has revised India’s GDP growth forecasts for FY2026-27 upwards to 6.5%, increasing its January prediction by 0.1%.

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According to the IMF’s latest World Economic Outlook, released on April 14, the upward revision in India’s growth outlook follows a reduction in tariffs by the U.S. on Indian goods from 50% to 10%, which partly offsets the economic impact of the ongoing conflict in West Asia.

Global Growth Revised Down

For 2026, the IMF revised its outlook for global GDP growth downward from 3.3%, estimated previously in January, to 3.1%. The projection is also below the level of 3.4% seen in 2025.

According to the international organization, the war in the region of West Asia has affected global economic performance since February 2026 due to American-Israeli attacks against Iran. Trade routes such as the Strait of Hormuz have been affected by the situation.

Inflation Outlook Moves Higher

The IMF has raised its global inflation projection for 2026 to 4.4%, compared to 4.1% in 2025 and 3.8% estimated earlier in January. This is based on the increase in oil and gas prices as a result of disturbances in the supply chain for energy sector.

According to the report, the rise in energy prices globally is attributed to the escalating hostilities and retaliatory strikes against energy facilities in Gulf nations.

Indian Economic Expansion Driven by Improved Trade Flows

Part of the reason for the brighter prospects for India is due to eased trade measures, which include the lowering of tariffs imposed by the United States. This is happening despite geopolitical concerns affecting global trade flows.

While there may be some slowing down of the world economy, India still has much faster projected economic growth compared to the world average.

Risks From Prolonged Conflict

The IMF cautioned that its baseline forecast assumes the West Asia conflict remains short-lived and that energy prices rise by a moderate 19% during the year.

However, in a more adverse scenario where the conflict extends and energy shocks persist into 2027, global growth could fall to 2% in both 2026 and 2027, according to the report.

The IMF also highlighted that although there have been signs of a temporary ceasefire, the economic impact has already materialised, and downside risks to global growth remain elevated.