The International Monetary Fund has raised India’s FY27 growth forecast to 7 per cent, citing resilient domestic demand and strong services activity.
The International Monetary Fund (IMF) has raised India’s growth forecast by 60 basis points to 7 per cent for the current fiscal year, 2026-27 (FY27).
“India’s growth remained robust, underpinned by domestic demand and services, despite higher oil prices,” the multilateral agency said in its latest World Economic Outlook (WEO), released during the annual Fund meeting in Bangkok. “India remains among the fastest-growing major economies, with growth in 2026 (Fiscal Year 2026-27) projected at 7 per cent. This reflects stronger-than-expected momentum, supported by resilient domestic demand and robust services activity,” it said.
Earlier this month, the Reserve Bank of India raised its real GDP growth projection for FY27 to 7.1 per cent from 6.7 per cent. At the same time, the World Bank on Tuesday raised India’s growth forecast for the current fiscal year by 50 basis points to 7.1 per cent. However, it cautioned that growth in the second half of the current fiscal year is likely to slow. Last month, the Asian Development Bank (ADB), the OECD, and other global agencies like S&P and Fitch raised India’s FY27 GDP growth projection to around 7 per cent, boosted by robust June quarter economic activity and resilient domestic demand despite the West Asia conflict. The Paris-based Organisation for Economic Cooperation and Development (OECD) raised its GDP growth forecast by 80 basis points to 7.1 per cent for FY27.
IMF highlights benefits of free trade agreements
IMF emphasised that free trade agreements benefit economies such as India. “Efforts to negotiate or deepen new regional and bilateral trade agreements—such as the EU’s recent trade agreements with India and MERCOSUR (the Southern Common Market) or the United Kingdom’s agreement with India—could lower tariffs and nontariff barriers on traded goods and services among participating economies, facilitate adjustments to recent trade policy changes, and strengthen supply-chain resilience,” it said.
On Monday itself, a Bloomberg Economics report said that India’s free trade agreements (FTAs) already in force, including those agreed with the European Union (EU) and New Zealand, could add about $140 billion to the country’s gross domestic product by 2035, lifting economic output by 1.7 per cent and export volumes by 6.2 per cent. One key assumption is that the agreements with the EU and New Zealand are implemented from 2027.
Global growth outlook faces inflation and conflict risks
Meanwhile, highlighting the resilience of the global economy, the IMF said global activity is projected to grow 3.1 per cent in 2026 and 3.4 per cent in 2027. Global headline inflation is forecast to rise to 4.7 per cent this year, driven primarily by higher commodity prices, and to fall back to 4.1 per cent next year. However, it cautioned that global economic resilience is under Strain. Decisive policy action is needed. “Countries must move from coping to rebuilding, restoring fiscal space and supply-side resilience to enhance their ability to grow sustainably,” it said
India’s medium-term growth outlook strengthens
The IMF said global output is projected to expand at an average annual pace of 3.2 per cent in 2028–31, a persistently lacklustre performance compared with the pre-pandemic (2000–19) historical average of 3.7 per cent. Compared with January 2026, the medium-term outlook has become increasingly uneven, with downgrades concentrated among economies directly affected by the Middle East conflict and among energy-importing emerging market and developing economies elsewhere, excluding India.
“India stands out with upward revisions, reflecting sustained momentum and growing evidence of stronger growth potential supported by favorable demographic dynamics, a large and expanding domestic market, and continued structural reforms,” it said.
Published on October 13, 2026
