India's economy will grow 6.4% in 2025 and 2026, the International Monetary Fund (IMF) said in its latest World Economic Outlook update.
This is a slight upward revision from previous forecasts, with the IMF crediting an improved global environment, stable domestic demand, and the nation's continued policy and structural reforms.
India's growth prospects are still favorable, the IMF said, underpinned by strong public expenditure, resilient private consumption, and reform-led momentum. "We actually have pretty stable growth," Division Chief in the IMF Research Department Deniz Igan, said in a press briefing. The new forecast assumes a 0.2 percentage point upgrade for 2025 and a 0.1 percentage point boost for 2026 compared to the IMF's April projections.
For this year, India's growth is pegged at 6.5%. Although the IMF tends to give India's figures on a fiscal year basis, it has also provided calendar year projections, according to which India is projected to grow at 6.7% in 2025 and 6.4% in 2026.
To continue this growth path, the IMF articulated a range of essential policy domains: raising employment prospects outside of agriculture, raising worker skills, making the labour market more flexible, improving infrastructure, and reducing trade barriers. Over the long term, essential education reforms, changes in land use, social protection reforms, and simplification of regulations will be essential to realizing India's full economic potential.
Worldwide, the IMF has modestly increased its growth forecasts, projecting the world economy to grow by 3% in 2025 and 3.1% in 2026. Growth in the emerging and developing economies is projected at 4.1% and 4%, respectively, for the two years. China's projection has been raised appreciably to 4.8% in 2025, based on robust domestic performance and a relaxation of trade tensions with the United States.
Development in the advanced economies will continue to be sluggish, forecasting 1.5% for 2025 and 1.6% for 2026. The United States is forecast to grow by 1.9% in 2025 and 2% in 2026, supported by lower tariffs, more favorable financial conditions, and modest fiscal support.
Even with the exposure of high interest rates and geopolitical tensions, the IMF points out that the world economy is more resilient than previously expected. For India, the major takeaway is the need for policy stability and continuity in reforms in order to maintain and reinforce its present growth momentum.
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