The International Monetary Fund (IMF) has raised India’s growth projection for FY27 to 6.5 per cent, up by 10 bps, marking a slight improvement from its earlier estimate. The revision comes despite a challenging global backdrop shaped by intensifying geopolitical tensions, particularly the ongoing conflict in the Middle East. According to the IMF’s latest World Economic Outlook and Global Financial Stability update, India’s economic expansion is expected to remain steady at 6.5 per cent in FY28 as well. The agency attributes this stability to strong momentum carried over from 2025, resilient domestic demand, and easing tariff pressures from the United States.
As the IMF notes, “For 2026, growth is revised upward moderately by 0.3 percentage point (0.1 percentage point relative to January) to 6.5 per cent, led by positive contributions from the carryover of the strong 2025 outturn and the decline in additional US tariffs on Indian goods from 50 to 10 per cent, which outweigh the adverse impact of the Middle East conflict. Growth is projected to stay at 6.5 per cent in 2027.”
For context, the IMF presents India’s economic data based on its fiscal year cycle.
It further highlighted, “In India, growth for 2025 is revised upward by 1.0 percentage point relative to October, to 7.6 per cent, reflecting the better-than-expected outturn in the second and third quarters of the fiscal year and sustained strong momentum in the fourth quarter.”
Global Growth Faces Pressure From Conflict
While India’s outlook remains relatively stable, the broader global economy is expected to feel the strain of geopolitical disruptions. The IMF cautions that the Middle East conflict is affecting trade routes, energy supplies, and financial conditions, which in turn could dampen growth across emerging markets.
Emerging and developing economies are projected to grow at 3.9 per cent in 2026 before picking up slightly to 4.2 per cent in 2027. Across Asia, growth momentum is expected to moderate, even as China sees a slight upgrade in its outlook.
The report also points to uneven regional effects, with commodity-importing nations facing inflationary pressures, while tourism-dependent economies may see weaker demand.
After a period of decline, global inflation is expected to rise again in the near term. Higher energy and food prices are likely to push inflation upward before it gradually eases later in the decade.
The IMF states, “global inflation is projected to pause its decline, with headline inflation increasing from 4.1 per cent in 2025 to 4.4 per cent in 2026 before falling back to 3.7 per cent in 2027. This is a 0.7 percentage point upward revision in 2026 from the figure in the October 2025 WEO, reflecting higher energy and food prices.”
Inflation trends, however, will differ across economies. While advanced economies may continue to grapple with persistent services inflation, others could face pressure from supply disruptions and rising energy costs.
In India’s case, inflation is expected to stabilise over time after easing in 2025 due to softer food prices, gradually aligning closer to the central bank’s target.
A Shifting Global Economic Landscape
The IMF highlights that the global economic outlook is increasingly shaped by overlapping shocks rather than a smooth post-pandemic recovery. Geopolitical tensions, trade fragmentation, and financial market volatility are now key factors influencing growth trajectories.
Risks remain tilted to the downside, with the possibility of prolonged conflict or deeper energy disruptions posing significant threats to global growth.
