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IMF Revises India’s GDP Growth Forecast Down to 6.2% for FY26 and 6.3% for FY27.

Economy Business | Dated: 24 Apr 2025

In April 2025, the International Monetary Fund (IMF) released its "April 2025 World Economic Outlook (WEO): A Critical Juncture-amid Policy Shifts" report. The IMF revised India’s GDP growth forecast for Financial Year 2025-26 (FY26) down by 30 basis points (bps) to 6.2%, from its previous estimate of 6.5%. Additionally, the IMF lowered the forecast for FY27 to 6.3% from the earlier projection of 6.5%.

🎯 Key Highlights:

- The report highlighted that the growth rate for FY26 is supported by private consumption, especially in rural areas. However, the growth projection for FY27 is slightly lower due to trade tensions and global uncertainty. The IMF indicated that persistent risks due to trade disruptions and geopolitical tensions are weighing on growth, but factors like enhanced employment, better credit access, and easing inflation are expected to boost private consumption.
- As per the IMF's forecast, India’s consumer price inflation is expected to decrease to 4.2% in FY26, down from 4.7% in FY25. The inflation rate is further projected to decrease to 4.1% in FY27, reflecting a positive trend towards price stability over the next two years.
- The report projects India's Current Account Deficit (CAD) at 0.9% of GDP in FY26 and 1.4% in FY27. In terms of employment, the unemployment rate is expected to remain static at 4.9% throughout this period, indicating stability in the labor market.

💡 Other Important Facts:

(i) On the global front, the IMF forecasts the world’s GDP to grow by 2.8% in Calendar Year 2025 (CY25) and 3% in CY26. These growth projections have been revised downward from the previous estimate of 3.3% for both years, reflecting a combined downgrade of 80 basis points. This brings global growth below the 2009-19 average of 3.7%.
(ii) Global inflation is expected to decrease more gradually, with projections of 4.3% in CY25 and 3.6% in CY26. This marks an adjustment from the previous forecast, with upward revisions for advanced economies and slight downward revisions for emerging markets. The easing inflation trend is seen as a positive sign for the global economy.
(iii) The IMF further revised the growth projections for emerging and developing economies, estimating growth rates of 3.7% for CY25 and 3.9% for CY26. These projections reflect a decrease in growth expectations for these economies as a whole, primarily driven by ongoing challenges in the global trade environment and geopolitical tensions.

📚 Test Your Knowledge:

According to the recently released "April 2025 World Economic Outlook (WEO)" report, what is India's revised GDP growth forecast for FY26?

Correct Answer: 6.2%

🚀 Quick Recap:

About International Monetary Fund (IMF)

Managing Director (MD)- Kristalina Georgieva
Headquarters- Washington DC, the United States of America (USA)