The International Monetary Fund (IMF) has significantly increased its economic growth forecast for India, projecting a robust 7% expansion for 2026. This marks a substantial upward revision of 0.6 percentage points (or 60 basis points) from its previous July 2026 outlook.
According to the latest World Economic Outlook report, titled “Resilience Under Strain, Urgent Choices,” the IMF attributes India's strengthened outlook to stronger-than-expected economic momentum, fueled by resilient domestic demand and robust activity in the services sector. This places India among the world's fastest-growing major economies, even as the global economy grapples with challenges such as the Middle East conflict, elevated energy prices, and persistent uncertainty.
India's Economic Momentum Continues
The IMF's baseline projection for India’s growth in 2026 now stands at 7%, following an anticipated 7.8% in 2025. The forecast for 2027 is retained at 7%. On a calendar-year basis, the IMF expects India's economy to grow by 7.4% in 2026 and 7% in 2027.
This positive revision for India contrasts sharply with a weaker outlook for several other emerging market and developing economies. The IMF projects growth in this group to slow from 4.5% in 2025 to 3.7% in 2026, before recovering slightly to 4.4% in 2027. Within emerging and developing Asia, China's growth is anticipated to decelerate to 4.5% in 2026, impacted by higher global oil prices, prolonged uncertainty, and structural headwinds.
Global Headwinds and Energy Price Concerns
Despite India's strong domestic performance, the IMF report cautions that the country is not entirely insulated from global energy shocks. The effects of higher energy prices are expected to vary based on countries' exposure to geopolitical conflicts and their status as energy exporters or importers.
The IMF’s baseline assumptions include the reopening of the Strait of Hormuz in March 2027, with a broad return to pre-war conditions by October 2027. However, energy prices are expected to remain above pre-war levels, and shortages could emerge in some emerging market and developing economies that lack sufficient inventories and face intense competition for available cargoes.
The broader global outlook remains subdued, with world output projected to expand by 3.1% in 2026, down from 3.5% in 2025, before a slight recovery to 3.4% in 2027. The IMF notes that these aggregate figures mask significant differences between economies, with growth increasingly shaped by exposure to supply shocks and demand linked to the global technology cycle.