The International Monetary Fund on Tuesday upgraded India’s GDP growth forecast to 6.4% for both 2025–26 and 2026–27, citing a friendlier global trade environment and improved financial conditions.
India’s revised growth outlook marks a turnaround from April, when the IMF had trimmed its forecast amid rising global trade tensions. The multilateral lender now attributes the upgrade to a “more benign external environment,” particularly the easing of U.S. trade tariffs.
“In India, growth is projected to be 6.4 per cent in 2025 and 2026,” the IMF noted in its World Economic Outlook update, adding that the improved forecast reflects less restrictive global conditions.
India’s economy expanded by an estimated 6.5% in 2024–25, the slowest in four years. The Reserve Bank of India has maintained its projection at 6.5% for the current fiscal, while the finance ministry sees growth between 6.3% and 6.8%. The IMF’s new estimate edges closer to the RBI’s view, but still lags behind its earlier 6.7% projection for 2026–27.
The upgraded forecast comes as the U.S. average effective tariff rate fell from 28% in April to 18.2% by July 28, according to data from The Budget Lab at Yale. This rollback helped ease the tariff pressure that had prompted earlier IMF downgrades.
IMF Chief Economist Pierre-Olivier Gourinchas called April’s U.S. tariff surge under former President Trump an “unprecedented escalation.” Since then, the dollar has weakened 8% and global financial conditions have improved, prompting the IMF to revise global GDP growth for 2025 to 3.0%, and 3.1% in 2026, both slightly higher than previous estimates.
Despite the upward revisions, the IMF warned that global trade remains weak and tariffs are still “historically high.” Gourinchas noted that global trade as a share of output is set to drop from 57% in 2024 to 53% by 2030, highlighting a troubling long-term trend.
China received the largest forecast bump, with 2025 growth now expected at 4.8%, up from April’s 4%, driven by strong early-2025 performance and U.S.–China tariff relief. Other nations upgraded include the U.S., Canada, Brazil, Saudi Arabia, and Nigeria.
