India is expected to remain one of the world's fastest-growing major economies despite a slight downward revision in its growth outlook by the International Monetary Fund (IMF). The global lender said robust consumer spending and a resilient services sector will continue to support the country's economy amid an uncertain global environment.
IMF trims FY27 forecast, upgrades FY28 outlook
In its July 2026 World Economic Outlook (WEO) Update, the IMF projected India's economy to expand by 6.4% in FY2026–27, marginally lower than the 6.5% forecast issued in April.
At the same time, it revised its FY2027–28 growth estimate upward to 6.7%, compared with its earlier projection of 6.5%.
The IMF said India remains one of the fastest-growing major economies.
"India remains among the fastest-growing major economies, with growth projected at 6.4 per cent, supported by strong momentum in private consumption and services activity," the report said.
Global growth to moderate in 2026
The IMF expects global economic growth to slow to 3.0% in 2026, down from the average of 3.5% recorded in 2024 and 2025. Global growth is projected to recover to 3.4% in 2027.
According to the report, the slowdown is primarily driven by the economic impact of the conflict in the Middle East. However, stronger demand resulting from advances in artificial intelligence (AI) and its wider adoption is expected to partially offset these headwinds.
The IMF said the overall global growth outlook remains broadly unchanged from its April forecast, although growth prospects are becoming increasingly uneven across countries.
It noted that energy-exporting economies outside the conflict zone are benefiting from higher energy prices, while countries closely linked to the technology sector are also experiencing stronger growth despite being energy importers. In contrast, energy-importing nations with limited exposure to the technology value chain, including many low-income economies, are expected to see weaker growth.
Domestic demand to remain India's growth engine
For India, the IMF said domestic demand will continue to drive economic growth.
Strong household consumption and sustained momentum in the services sector are expected to support the economy despite challenges posed by elevated commodity prices, geopolitical tensions and slower global trade.
RBI projects 6.6% growth for FY27
According to official government data, India's economy grew by 7.7% in FY2025–26, up from 7.1% in the previous financial year. Gross domestic product (GDP) expanded by 7.8% in the January–March quarter of FY26, compared with 8% in the preceding quarter.
During its June Monetary Policy Committee meeting, chaired by Governor Sanjay Malhotra, the Reserve Bank of India (RBI) lowered its FY27 GDP growth forecast to 6.6% from the earlier estimate of 6.9%.
The central bank cited risks arising from the ongoing conflict in West Asia, higher energy prices, supply-chain disruptions and weather-related uncertainties.
The RBI expects GDP growth of 6.6% in the first quarter of FY27, 6.3% in the second quarter, 6.5% in the third quarter and 6.8% in the fourth quarter.
