The International Monetary Fund has raised India’s economic growth forecast for 2025 to 7.3%, pointing to stronger-than-expected corporate earnings in the December quarter and sustained momentum into the fourth
quarter, while also indicating that the global economy has largely absorbed the immediate impact of recent tariff shocks.
In its latest World Economic Outlook update, the IMF increased India’s 2025 growth estimate by 0.7 percentage point to 7.3%. It expects growth to moderate to 6.4% in both 2026 and 2027, attributing the slowdown to the fading of what it described as “cyclical and temporary factors”.
India’s improved outlook comes after a period of strain last year, when a slowdown in corporate earnings weighed on economic activity and equity markets. That weakness triggered foreign portfolio outflows and heightened investor caution, alongside pressures from global trade tensions, elevated valuations, and concerns over export performance following US tariff measures.
At the global level, the IMF said the world economy has shown unexpected resilience and is likely to withstand the protectionist trade policies pursued by US President Donald Trump, aided by a surge in artificial intelligence-led investment across North America and Asia.
The IMF now projects global growth at 3.3% this year, unchanged from 2025 but higher than the 3.1% forecast it had made for 2026 in October.
The world economy “continues to show notable resilience despite significant US-led trade disruptions and heightened uncertainty”, IMF chief economist Pierre-Olivier Gourinchas and colleague Tobias Adrian wrote in a blog post accompanying the report.
The fund also upgraded its outlook for the United States, forecasting 2.4% growth this year, driven by the fastest pace of technology investment since 2001. This compares with its earlier projection of 2.1% for both this year and 2025.
Growth expectations for China have also improved, with the IMF now forecasting 4.5% expansion, up from 4.2% earlier, partly due to a trade truce with the US that has reduced American tariffs on Chinese exports.
While India remains the world’s fastest-growing major economy, the IMF expects growth to ease to 6.4% in 2026 from 7.3% last year, when activity was boosted by a stronger-than-anticipated second half.
