IMF cuts FY27 growth view to 6.4%, says India one of fastest growing econs

Informist

New Delhi

The International Monetary Fund has lowered its projection for India's GDP growth in 2026-27 (April-March) by 10 basis points to 6.4% amid geopolitical risks emanating from the West Asia war. However, India continues to be among the fastest-growing economies on the back of strong private consumption and services activity, the IMF said on Wednesday in the July edition of its World Economic Outlook report.

The financial institution raised its India growth forecast for 2027-28 by 20 basis points from its April projection to 6.7%. These projections were based on the assumption that the Strait of Hormuz will reopen in mid-July, with conditions broadly returning to pre-West Asia war levels by March 2027, the IMF said.

The Indian economy grew 7.8% in the March quarter and 7.7% in 2025-26, based on the new GDP series with 2022-23 as the base year. The IMF projection for India's growth in 2026-27 is 20 basis points lower than the Reserve Bank of India's forecast of 6.6%. In June, the central bank had cut India's 2026-27 growth forecast by 30 basis points, reflecting risks arising from the West Asia war.

World economy to grow sluggish 3% this yr: IMF

The IMF has cut its projection for global growth in 2026 by 10 basis points to 3%, a modest slowdown as the effects of the war are partly offset by accelerated demand-driven momentum in the global technology cycle. The multilateral body projects global growth in 2027 at 3.4%, 20 basis points higher than the April estimate but 10 basis points lower than the 3.4% growth recorded in 2025.

The Washington-based institution sees global headline inflation averaging 4.7% in 2026, 60 basis points higher than a year ago, mainly driven by higher energy and food prices. "Slightly revised upward from April, these projections indicate that the disinflation trend in place since the beginning of 2024 has stalled," the IMF said. It expects global inflation to moderate to 3.9% in 2027. "Driven by surging energy prices, global headline inflation rose for a third month in a row year on year in May, breaking the downward trend that has been in place since the beginning of 2024," the IMF said.