The International Monetary Fund (IMF), in its October outlook, has projected higher growth for India for 2025, but cut down points for the country’s growth in 2026.
In a ‘World Economic Outlook’ press briefing at the World Bank 2025 Annual Meeting in Washington, DC, on October 14, 2025, the IMF’s chief economist, Pierre-Olivier Gourinchas, increased India’s growth projection by 20 basis points to 6.6 per cent for 2025, downplaying the impact of the tariffs imposed by US President Donald Trump on Indian goods in August this year.
The IMF said the upward revision for India can be attributed to a carryover effect from a “strong” first quarter, which helped New Delhi “more than offset” the impact of the tariffs, thanks to strong private consumption.
India’s GDP in the June-end quarter had peaked to five-quarter high of 7.8 per cent, which was driven primarily by the manufacturing, services, and construction sectors.
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For the year 2026, however, the IMF projected a decline of 20 basis points, to 6.2 per cent, attributing it to a fading of the momentum from the first quarter.
In the case of emerging markets and developing economies, the body has projected a moderate growth from 4.3 per cent in 2024 to 4.2 per cent in 2025 and 4 per cent in 2026.
“Beyond China, emerging market and developing economies more broadly showed strength, sometimes because of particular domestic reasons, but recent signals point to a fragile outlook there as well,” it said.
IMF’s upgrade comes a week after the World Bank raised its India growth forecast for 2025-26 to 6.5 per cent from 6.3 per cent, while trimming its projection for the next fiscal year by 20 basis points to 6.3 per cent due to tariffs of 50 per cent levied by the US – one of the highest imposed on any country in the world.
Higher US tariffs are curtailing external demand and rising trade policy uncertainty is weighing on investment in major export-led economies, the report said.
On Monday, IMF’s Managing Director, Kristalina Georgieva, expressed strong confidence in India because of the “boldness of their reforms”, she said, while acknowledging India’s reform initiatives and its successful digital implementation strategy.
“I’m very big on India because of the boldness of their reforms. For example, everyone told India that digital identity on a mass scale could not be done... but India proved them wrong,” she said.
The IMF projects India as the fastest-growing economy, soon slated to surpass Japan to become the fourth-largest economy by nominal GDP. It is also expected to advance further and move past Germany to secure the third position after the US and China.
Georgieva also said she recognised the Indian economy as a ‘key growth engine’ in global recovery after the pandemic.
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