The International Monetary Fund (IMF) on Monday raised India’s economic growth projection for 2025 by a sharp 0.7 percentage point to 7.3 per cent, citing stronger-than-expected performance in the second half of the year.
In its latest World Economic Outlook Update, the IMF said the upward revision reflects a “better-than-expected outturn in the third quarter and strong momentum in the fourth quarter,” reaffirming India’s position as one of the fastest-growing major economies globally.
The Fund, however, projected that India’s growth would moderate to 6.4 per cent in both 2026 and 2027 as cyclical and temporary factors fade.
Despite the expected easing, the IMF said India would remain a key driver of growth among emerging market and developing economies, which are projected to expand at just over 4 per cent in 2026 and 2027.
The update noted that emerging and developing Asia continues to benefit from strong technology-related investment and trade, even as global economic momentum becomes uneven.
On the global outlook, the IMF projected world growth to remain steady at 3.3 per cent in 2026, supported by easing trade tensions, accommodative financial conditions, and a surge in technology-driven investment, particularly in artificial intelligence.
Inflation trends were also seen as favourable for India. The IMF said inflation is expected to return close to target levels after a marked decline in 2025, driven largely by subdued food prices, which could provide further support to domestic demand.
At the same time, the IMF cautioned that risks to the global outlook remain tilted to the downside. A reassessment of expectations around AI-driven productivity gains could trigger a pullback in investment and lead to tighter global financial conditions, with spillover effects on emerging economies.
On the upside, the Fund said faster adoption of artificial intelligence could lift global growth, provided productivity gains materialise and financial risks remain contained.
–IANS
