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Indian Economy To Grow At 6.6%, Set To Outpace China In FY25: IMF Report
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- 2 min read
Last Updated: 27th October 2025 - 04:15 pm
Summary:
The IMF has raised India’s FY26 growth forecast to 6.6%, citing strong Q1 performance of 7.8%, keeping it ahead of China’s projected 4.8%. Growth is expected to moderate to 6.2% in 2026. Global growth is seen slowing to 3.2% in 2025. The IMF warned of risks from protectionism and fiscal pressures but said India’s outlook remains strong, aligning with the government’s 6.3–6.8% GDP target.
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India is expected to remain one of the fastest-growing emerging economies in the coming year. The International Monetary Fund (IMF) has raised its forecast for India’s economy in the 2025-26 financial year to 6.6%, citing a strong start to the year despite rising global trade tensions.
According to the IMF’s October edition of its World Economic Outlook, the revision upwards is largely attributed to the robust performance in the first quarter of FY26, which recorded growth of 7.8%.
Invest in Indian Markets and Unlock Future Potential With 5paisa!In contrast, China’s growth is projected at just 4.8% for the same period, underscoring India’s comparatively stronger momentum. However, the IMF warns that this momentum may not be fully sustained. Its forecast for 2026 has been pared back to 6.2%.
On a global scale, the IMF sees growth easing. Output for 2025 is now projected at 3.2%, with a further modest drop to 3.1% anticipated in 2026.
Advanced economies are forecast to grow at just 1.6% next year, while emerging markets as a group are expected to grow at 4.2%, marking a 0.2% slowdown compared to earlier expectations.
The organisation also highlighted significant risks. New waves of protectionism, labour-market disruptions, and shrinking fiscal space could all derail growth prospects. In India’s case, while higher U.S. tariffs had been a concern, the initial adverse impact appears to have been offset by the strong economic carry-forward from Q1.
The IMF urged policymakers worldwide, including in India, to reinforce economic resilience by rebuilding fiscal buffers, safeguarding central bank independence, and advancing structural reform agendas.
For India, the forecast increase offers a vote of confidence. The economy grew by 6.5 % in 2024-25, and the government’s own GDP target for 2025-26 of 6.3-6.8 % now appears well within reach.
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