Photo: APK / Wikimedia Commons, CC BY 4.0
The International Monetary Fund (IMF) on Tuesday, October 13, raised its forecast for India’s economic growth in 2026-27 to 7%, up from the 6.4% it projected in July, saying domestic demand and the services sector had held up better than expected despite high oil prices. The Fund also expects India to grow 7% in 2027-28, up from 6.7% earlier, keeping the country the fastest-growing major economy in its projections.
The new numbers came in the October edition of the IMF’s World Economic Outlook, released at the annual meetings of the IMF and the World Bank Group in Bangkok. On a calendar-year basis, the Fund puts India’s growth at 7.4% in 2026 and 7% in 2027.
Why India was upgraded
The IMF said the revision reflects “stronger-than-expected momentum” and pointed to India’s favourable demographics, its large and growing domestic market and continuing structural reforms as signs of stronger long-term growth potential. The upgrade follows similar moves at home. The Reserve Bank of India recently raised its own estimate for this year to 7.1%, and the economy grew 7.8% in 2025-26 and in the April-June quarter of the current year.
The forecast assumes crude oil will average about $95.74 a barrel in 2026, roughly 41% higher than last year, before easing to around $87 in 2027. That matters for India, which imports most of the oil it uses.
A world pulling in two directions
Global growth is now projected at 3.1% in 2026, a touch above the July estimate, and 3.4% in 2027. The IMF described a “bifurcated” outlook: advanced economies, lifted by heavy investment in artificial intelligence, are expected to grow 2.1% this year, while energy importers that are not part of the AI boom face the greatest strain from the war involving Iran. Emerging and developing economies as a group were marked down slightly to 3.7%, with weaker forecasts for China, Russia and Brazil.
West Asia takes the hardest hit. The Middle East and Central Asia region is now expected to shrink 0.3% in 2026, against growth of 1.9% forecast six months ago, largely because of a longer closure of the Strait of Hormuz than the Fund had assumed. Saudi Arabia’s economy is projected to contract 3.3%, and Bahrain, Iraq, Kuwait and Qatar are expected to see double-digit contractions before rebounding next year. Global inflation is forecast to rise to 4.7% this year.
The global economy has been resilient, but that resilience is under strain, with risks tilted to the downside.
Silvana Tenreyro, IMF chief economist
What happens next
The IMF urged governments to use only temporary, targeted support to cushion households from high energy and food costs, to keep monetary policy focused on price stability and to rebuild fiscal buffers given record debt levels. It warned that a longer war could revive inflation, and that the AI-driven boom could stall abruptly if expectations about profits are reassessed. The Bangkok meetings run until Sunday, October 18 and bring together finance ministers and central bank governors from member countries.
