IMF cites strong first-quarter carryover as key driving force
The IMF said in its World Economic Outlook report that the upward revision for India’s 2025/26 growth was on a “carryover from a strong first quarter more than offsetting the increase in the U.S. effective tariff rate on imports from India since July”.
India’s financial year runs from April to March.
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However, the IMF lowered India’s growth forecast by 0.2 percentage points to 6.2% for the next fiscal year, it said in the report released in Washington.
Global outlook weakens as trade tension escalate
IMF’s upgrade comes a week after the World Bank raised its India growth forecast for 2025/26 to 6.5% from 6.3%, while trimming its projection for the next fiscal year by 20 basis points to 6.3% due to U.S. tariffs.
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The IMF has projected growth of emerging market and developing economies to moderate from 4.3% in 2024 to 4.2% in 2025 and 4% in 2026.
“Beyond China, emerging market and developing economies more broadly showed strength, sometimes because of particular domestic reasons, but recent signals point to a fragile outlook there as well,” it said.
Higher U.S. tariffs are curtailing external demand and rising trade policy uncertainty is weighing on investment in major export-led economies, the report said.