The International Monetary Fund (IMF) has raised India’s GDP growth forecast to 7 per cent for 2026-27, up from 6.4 per cent in July. The revision in estimate comes on the back of a “stronger-than-expected momentum, supported by resilient domestic demand and robust services activity”. This comes just a week after the Reserve Bank of India (RBI) hiked its GDP growth estimate to 7.1 per cent for this year.
“India stands out with upward revisions, reflecting sustained momentum and growing evidence of stronger growth potential supported by favourable demographic dynamics, a large and expanding domestic market, and continued structural reforms,” the IMF said in an update to its flagship World Economic Outlook report.
GDP growth for 2027-28 is also projected at 7 per cent, up from the July estimate of 6.7 per cent. Significantly, the upward revision in India’s growth forecast comes despite geopolitical uncertainties such as the US-Iran war and the Russia-Ukraine war, both of which have implications for an energy-dependent country like India. “India’s growth remained robust, underpinned by domestic demand and services, despite higher oil prices,” the multilateral agency added.
According to the IMF’s forecasts, the average price of crude oil — across Brent, Dubai Fateh, and West Texas Intermediate — will be $95.74 per barrel in 2026, up 41 per cent from 2025. In 2027, the oil price is assumed to decline around 9 per cent to $87.39.
India To Be World’s Growth Engine
It is worth mentioning that India’s growth will remain the world’s driver as the sharply higher growth forecast for the country is in contrast to the global economy. In 2026, the IMF sees the world growing by 3.1 per cent, only slightly higher than 3 per cent in July. Meanwhile, global growth in 2027 is seen unchanged at 3.4 per cent.
Last month, the Asian Development Bank (ADB), the Organisation for Economic Cooperation and Development (OECD), and other global agencies like S&P and Fitch also raised India’s FY27 GDP growth projection to around 7 per cent. This was prompted by robust June quarter economic activity and resilient domestic demand despite the Middle East conflict.
China, Russia To Grow Slowly: IMF
The IMF has become more optimistic about some major advanced economies. Germany is now expected to grow by 1.3 per cent in 2026, up from the 0.7 per cent forecast made in July. The UK’s growth forecast has also been raised to 1.3 per cent from 1 per cent earlier.
Overall, advanced economies are now projected to grow by 2.1 per cent in 2026, compared with the 1.7 per cent growth rate estimated in July.
In contrast, the outlook for emerging markets and developing economies has weakened slightly. The IMF now expects this group to grow by 3.7 per cent in 2026, down from 3.8 per cent projected in July. This comes even after the sharp upgrade to India’s growth forecast.
The downgrade is mainly because countries such as China, Russia and Brazil, along with several Middle East economies, are expected to grow more slowly or even contract, weighing on the overall outlook for emerging markets.
