IMF Raises India’s FY26 GDP Growth Forecast to 6.4% in July Update

The International Monetary Fund (IMF) has increased India’s gross domestic product (GDP) growth forecast to 6.4 % for fiscal year 2025-26 as compared to its 6.2% forecast in April 2025. The IMF, in its July 2025 World Economic Outlook Update, released on 29 July 2025, expects a better global economic outlook compared to the situation prevailing before the release of the April 2025 report.

The IMF has  also increased the forecast for 2026-27 by 0.1 % to 6.4 %.

According to the IMF, India will remain the fastest-growing major economy in the world.

Improvement in the World Economic Situation 

The IMF released the April 2025 report against the backdrop of American President Donald Trump’s threat of imposing high tariffs on major trading partners like China, the European Union, India and others.

The latest report expects lower-than-expected average tariffs to be imposed by the United States on its trading partners, an improvement in the American economy due to the weakening of the US dollar and fiscal expansion in certain major economies, including America.

Thus, the IMF expects a 3.1 % growth rate in the world economy in the 2025 calendar year as compared to the April forecast of 2.8 %. 

Similarly, it expects the global economic growth rate to be 3.1 % in 2026 as compared to 3% forecasted in the April report.

The United States economy is expected to grow by 1.9 % (1.8% in April forecast) in 2025 and 2%  (1.7% in April forecast) in 2026. 

The Chinese economic growth forecast has also been revised upward to 4.8 % in 2025 and 4.2 % in 2026.  In its earlier April forecast , the IMF had predicted a growth rate of 4% in 2025 and 2026 for China.

Potential Threat to the World Economy 

The IMF report has identified the following risks that can weaken the economic growth rate in the world and negatively affect the countries.

• Higher-than-expected effective tariff rates imposed by the United States,
• Uncertainty in the world economy due to the delay in signing of permanent agreement,
• Geopolitical tension around the world could lead to an increase in the prices of crude oil and other commodities, 
• It will adversely affect the global financial flow, advertising affecting foreign direct investment and capital flow.

About the World Economic Outlook 

• The World Economic Outlook is a flagship report of the IMF in which its economists analyse and project the future growth rate of the world economy in the near and medium term.
• The World Economic Outlook Report is issued twice a year.
• The IMF, if necessary, publishes the World Economic Outlook Update between biannual reports.

About the International Monetary Fund (IMF)

Established - 1944 

The International Monetary Fund is one of the top two global multilateral development institutions. The other one is the World Bank.

It is the Lender of last resort to the member countries facing a balance of payment or economic crisis.

Member countries -191. European country Liechtenstein joined the IMF in October 2024 to become the 191st member of the IMF.

Headquarters: Washington, D.C, USA

Managing Director: Kristalina Georgieva

Reports issued by the IMF

• World Economic Outlook 
• Global Financial Stability Report 
• Fiscal Monitor