NEW DELHI: The International Monetary Fund (IMF) has raised India’s growth forecast by 0.2 percentage points to 6.6% for the 2025/26 fiscal year as the country’s strong growth momentum is seen offsetting the impact of high U.S. tariffs on Indian goods.
India’s GDP grew at an unexpectedly higher pace of 7.8% in April-June thanks to strong private consumption, helping it remain the fastest growing major economy despite a cloudy export outlook due to steep 50% tariffs imposed by U.S. President Donald Trump.
The IMF said in its World Economic Outlook report that the upward revision for India’s 2025/26 growth was on a “carryover from a strong first quarter more than offsetting the increase in the U.S. effective tariff rate on imports from India since July”.
World Bank warns US tariffs on Indian exports to partly slow South Asia growth next year
India’s financial year runs from April to March.
However, the IMF lowered India’s growth forecast by 0.2 percentage points to 6.2% for the next fiscal year, it said in the report released in Washington.
IMF’s upgrade comes a week after the World Bank raised its India growth forecast for 2025/26 to 6.5% from 6.3%, while trimming its projection for the next fiscal year by 20 basis points to 6.3% due to U.S. tariffs.
The IMF has projected growth of emerging market and developing economies to moderate from 4.3% in 2024 to 4.2% in 2025 and 4% 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.
Higher U.S. tariffs are curtailing external demand and rising trade policy uncertainty is weighing on investment in major export-led economies, the report said.
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