IMF lifts India’s FY26 growth forecast to 6.6%, flags resilience amid Trump’s tariff shocks

The financial institution noted that India’s “strong first quarter” more than counterbalanced the US effective rate, in its World Economic Outlook (WEO) report released on Tuesday.

For FY2026-27, the IMF also reviewed the growth forecast, raising it by 20 basis points to 6.2 percent as part of an update to the WEO.

Last week, the World Bank elevated India’s FY2026 GDP forecast to 6.5 percent from 6.3 percent in June this year.

It had slashed the growth forecast for FY2026-27 by 20 basis points to 6.3 percent, in view of the higher-than-anticipated tariffs on India’s exports to the United States.

The World Bank had said India would continue to be the world’s fastest growing major economy, bolstered by sustained strength in consumption growth.

Pierre-Olivier Gourinchas, Economic Counsellor and Director of the Research Department at the International Monetary Fund (IMF), has urged countries to strengthen their economic resilience by building fiscal buffers, reinforcing institutional frameworks, and maintaining their integration with the global economy.

Speaking at a press briefing, Gourinchas emphasised that economic growth is largely driven by the private sector and the adoption of external technologies.

“Countries need to make the right efforts for scaling the labour force and infrastructure investment so that they can grow rapidly and unleash private-sector innovation and entrepreneurship,” he was quoted as saying by Business Standard.

His remarks followed IMF Managing Director Kristalina Georgieva’s recent observation that “uncertainty is the new normal” and nations must prepare accordingly.

India’s Economic Survey has projected GDP growth in the range of 6.3% to 6.8% for FY26.

Chief Economic Adviser V. Anantha Nageswaran recently stated, “While I should actually be looking at revising my (GDP) numbers upward, given my cautious nature, I am more comfortable now in saying that we will be tending towards the upper end of this range.”

In July, the IMF raised India’s growth forecast by 20 basis points to 6.4%, citing strong reform momentum, resilient consumption, and increased public investment.

The upward revision also reflected a favourable external environment and easing inflation.

Globally, the IMF increased its 2025 growth projection by 20 basis points to 3.2%, while maintaining the 2026 estimate at 3.1%.

“The global economy has shown resilience to the trade policy shocks, including because these shocks materialised on a smaller scale than expected at their onset, but the drag from shifting policies is becoming visible in more recent data,” the IMF report noted.

Meanwhile, India faces fresh challenges from a 50% tariff imposed by the United States, which threatens key labour-intensive sectors such as textiles, footwear, and marine products.

Additionally, the Donald Trump administration’s decision to levy a one-time fee of $100,000 on new visa applications for skilled workers could impact India’s $280-billion tech services sector and endanger thousands of jobs.

The finance ministry said the potential effects of these restrictions on future remittances and the services trade surplus warranted close monitoring.