IMF predicts big drop in India’s FY27 GDP growth to 6.4% from 7.3% this year

Data released at the end of November 2025 showed India’s GDP growth rate unexpectedly jumped to 8.2% in July-September, comfortably beating all forecasts. Since then, the Reserve Bank of India (RBI) in December upgraded its growth forecast for the current fiscal to 7.3%. Earlier this month, the Ministry of Statistics and Programme Implementation (MoSPI) pegged the first advance estimate of GDP growth for 2025-26 at 7.4%, which implied growth slowing down to 6.9% in the second half of the year from 8% in the first half.

For 2027-28, the IMF has made no change to its October 2025 forecast of 6.4%.

However, these projections, including MoSPI’s first advance estimate, do not take into account the significant changes being undertaken to update and revise India’s GDP data, which received a C grade from the IMF in December.

The first growth print under the new series, which will see the base year being updated to 2022-23 from 2011-12 and incorporate several methodological changes including new sources of data, will be made public by MoSPI on February 27 when it will announce the GDP estimate for October-December 2025 and the second advance estimate for 2025-26. As such, forecasts by various agencies will likely have to be revised once the new series is available.

Updating the base year and improving data coverage and methodologies are crucial to presenting the correct picture of the economy which changed over the years. Commenting further on the Indian economy, the IMF said on Monday that inflation is expected to return to “near target levels”.

Global growth outlook

Like in the case of India, the IMF raised the 2026 global growth forecast by 20 bps to 3.3% and retained the projection for 2027 at 3.2%, noting that the “steady performance on the surface” was the result of divergent forces balancing out.

“Headwinds from shifting trade policies are offset by tailwinds from surging investment related to technology, including artificial intelligence (AI), more so in North America and Asia than in other regions, as well as fiscal and monetary support, broadly accommodative financial conditions, and adaptability of the private sector,” the report said.

The US led the way in terms of growth upgrades among advanced economies and is now seen expanding by 2.4% in 2026, 30 bps faster than expected in October. However, growth is seen 10 bps slower at 2% in 2027.

Meanwhile, the world’s second largest economy, China, also received a 30-bps upgrade for 2026 to 4.5%, with the 2027 forecast being pegged 20 bps lower at 4%. The IMF’s forecasts assume an effective tariff rate of 18.5% for the US, slightly down from 18.7% in October. “Economic policy uncertainty is assumed to remain elevated through 2026,” the IMF added.