The International Monetary Fund (IMF) has revised India's growth projection upwards to 6.6% for the fiscal year 2025, according to its latest World Economic Outlook. This forecast, released on Tuesday, marks an increase from the previous estimate of 6.5% and comes despite global economic headwinds and trade tensions.
The upward revision for 2025 is attributed to a strong first quarter, which helped India offset the impact of increased US tariffs on imports from India since July. India's GDP peaked at a five-quarter high of 7.8% in the June-end quarter, driven primarily by the manufacturing, services, and construction sectors.
While the IMF has raised India's growth forecast for 2025, it has lowered the projection for 2026 to 6.2%. This downward revision considers a fading of the momentum from the first quarter of FY2025. Compared to the pre-tariff forecast in October 2024, India's growth is projected to be cumulatively 0.2 percentage points lower.
Despite these adjustments, the IMF отметила that India will still expand at a healthy pace and is expected to be the fastest-growing major economy in 2025. The IMF expects global growth to fall from 3.3% in 2024 to 3.2% in 2025 and 3.1% in 2026.
Other organizations have also offered their projections for India's economic growth. Deloitte India forecasts a GDP growth between 6.7% and 6.9%, averaging 6.8% for FY2025-26. Fitch Ratings projects a 6.9% growth, while the Reserve Bank of India (RBI) projects FY26 growth at 6.8%. The World Bank, in its South Asia Development Update, revised India's FY26 growth forecast to 6.5%.
Several factors are expected to contribute to India's economic growth. These include strong domestic demand, policy reforms, and a revival in private investment. Easing inflation and proactive monetary policy are expected to further fuel consumer spending. Structural measures, such as the proposed GST 2.0, will also reinforce medium-term growth prospects.
However, some challenges and uncertainties remain. Higher US tariffs and increasing protectionism could reduce demand for Asian exports and weigh on growth. Escalating trade uncertainties and India's inability to secure a trade deal with the United States are potential risks that could impact India's economic growth.
Despite these challenges, India's economy has shown remarkable resilience. With its strong macroeconomic fundamentals, favorable demographics, and rising consumer spending, India is poised for a decade of structural transformation. India is expected to become the third-largest economy in the world by 2030.
