In a significant boost to India’s economic outlook, the International Monetary Fund (IMF) has upgraded its growth projection for the country in 2025 to an impressive 7.3 percent. This marks a sharp upward revision of 0.7 percentage points from earlier estimates, driven primarily by stronger-than-expected performance in the latter half of the year.
The IMF’s latest World Economic Outlook update highlights robust results in the third quarter and sustained momentum heading into the fourth, cementing India’s position as one of the world’s fastest-growing major economies. Despite this optimism, the fund anticipates a moderate slowdown in the coming years, with growth rates projected to ease to 6.4 percent in both 2026 and 2027.
India continues to shine as a key growth engine for emerging and developing economies, outpacing their average forecast of just over 4 percent in the medium term. Emerging Asian nations, in particular, are benefiting from technology-driven investments and trade opportunities, even as global economic conditions vary.
On the inflation front, positive news emerges for India. After a substantial decline in 2025, inflation is expected to stabilize near target levels, supported by controlled food prices that will bolster domestic demand. Globally, the IMF projects steady 3.3 percent growth in 2026, fueled by easing trade tensions, favorable financial conditions, and surging investments in artificial intelligence (AI).
However, risks loom large. Should AI benefits fall short of expectations, investment could falter, tightening global financial conditions and impacting emerging markets. Conversely, rapid AI adoption could supercharge productivity and global growth, provided financial stability is maintained.
This revised forecast underscores India’s resilient economic trajectory amid a complex global landscape, positioning it as a beacon for investors and policymakers alike.