{"id":102127,"date":"2025-07-29T13:12:12","date_gmt":"2025-07-29T13:12:12","guid":{"rendered":"https:\/\/www.europesays.com\/us\/102127\/"},"modified":"2025-07-29T13:12:12","modified_gmt":"2025-07-29T13:12:12","slug":"imf-upgrades-indias-fy26-gdp-growth-forecast-to-6-4-as-trade-tensions-ease-business-news","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/102127\/","title":{"rendered":"IMF upgrades India\u2019s FY26 GDP growth forecast to 6.4% as trade tensions ease | Business News"},"content":{"rendered":"

The International Monetary Fund (IMF) on Tuesday raised its Gross Domestic Product (GDP) growth forecast for India to 6.4 per cent for both 2025-26 and 2026-27 on account of easing global trade tensions, with the world economy also seen expanding at a slightly faster pace than what the multilateral organisation had predicted in April.<\/p>\n

\u201cIn India, growth is projected to be 6.4 per cent in 2025 and 2026, with both numbers revised slightly upward, reflecting a more benign external environment than assumed in the April reference forecast,\u201d the IMF said in an update to its World Economic Outlook report, referring to India\u2019s fiscal years that begin in 2025 and 2026.<\/p>\n

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According to non-partisan policy research center The Budget<\/a> Lab at Yale, US consumers faced an overall average effective tariff rate of 18.2 per cent as on July 28, down from 28 per cent on April 9.<\/p>\n

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India\u2019s GDP is estimated to have increased by 6.5 per cent in 2024-25, the lowest growth rate in four years. The Reserve Bank of India (RBI), meanwhile, expects the GDP to grow by another 6.5 per cent in the current fiscal, with the Indian finance ministry estimating it in the range of 6.3-6.8 per cent. For 2026-27, the RBI on April 9 had forecast a growth rate of 6.7 per cent.<\/p>\n

Back in April, the IMF had cut its growth forecasts for India by 30 basis points (bps) to 6.2 per cent for 2025-26 and by 20 bps to 6.3 per cent for 2026-27 due to \u201chigher levels of trade tensions and global uncertainty\u201d. Since then, the tariff war waged by the US has eased somewhat, with IMF Chief Economist Pierre-Olivier Gourinchas calling the Trump administration\u2019s April actions an \u201cunprecedented escalation\u201d.<\/p>\n

Moreover, global financial conditions have eased and the US dollar has weakened around 8 per cent since January, allowing the IMF to now project that the global GDP will grow 3 per cent in 2025 and 3.1 per cent in 2026, up from 2.8 per cent and 3 per cent, respectively, predicted in April.<\/p>\n

\u2018Historically high\u2019 tariffs<\/p>\n

However, the IMF continued to warn that while the \u201cmodest decline in trade tensions\u201d had contributed to the resilience of the global economy, tariffs remain \u201chistorically high\u201d and global policy remains highly uncertain, with risks to the world \u201cfirmly to the downside\u201d.<\/p>\n

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\u201c\u2026compared to our pre-April 2 forecast, global growth is revised downwards by 0.2pp (0.2 percentage points) this year. At around 3 per cent, global growth remains disappointingly below pre-COVID average. And we continue to project a persistent decline in global trade as a share of output despite the recent frontloading, from 57 per cent in 2024 to 53 per cent in 2030,\u201d Gourinchas said. One percentage point is equal to 100 basis points.<\/p>\n

The other countries expected by the IMF to grow at a faster pace now in both 2025 and 2026 include the US, Canada, China, Brazil, Saudi Arabia, and Nigeria. China, in fact, received the largest growth forecast upgrade by the IMF, with its GDP now seen expanding 4.8 per cent in 2025, up from 4 per cent predicted in April.<\/p>\n

\u201cThis revision reflects stronger-than-expected activity in the first half of 2025 and the significant reduction in US\u2013China tariffs. The GDP outturn in the first quarter of 2025 alone implies a mechanical upgrade to the growth rate for the year of 0.6 percentage point. A recovery in inventory accumulation is expected to partly offset payback from front-loading in the second half of 2025. Growth in 2026 is also revised upward by 0.2 percentage point to 4.2 per cent, again reflecting the lower effective tariff rates,\u201d the IMF said.<\/p>\n

China\u2019s GDP grew 5.4 per cent and 5.2 per cent in the first two quarters of 2025, beating forecasts, and keeping the world\u2019s second largest economy on track to meet the government\u2019s full-year growth target of 5 per cent.<\/p>\n

<\/p>\n

\"Siddharth
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Siddharth Upasani is a Deputy Associate Editor with The Indian Express. He reports primarily on data and the economy, looking for trends and changes in the former which paint a picture of the latter. Before The Indian Express, he worked at Moneycontrol and financial newswire Informist (previously called Cogencis). Outside of work, sports, fantasy football, and graphic novels keep him busy.
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