India to Remain Fastest-Growing Major Economy
India's GDP is predicted by the International Monetary Fund (IMF) to expand by 6.6% in 2025–2026, maintaining its position as the world's fastest-growing major economy. Strong domestic demand, rising manufacturing, and government reforms like GST 2.0 are all reflected in the estimate.
MARKET NEWS
10/25/20251 min read
As the fastest-growing major economy in the world, India's economic growth prediction for fiscal year 2025–2026 has been increased by the International Monetary Fund (IMF) to 6.6%. The IMF's most recent World Economic Outlook report details this upward revision, which highlights India's resilience in the face of global trade tensions, especially in the face of the recent hike in U.S. tariffs on Indian goods.
Strong Growth Despite Tariff Pressures
The higher forecast was attributed by the IMF to India's excellent first-quarter performance, robust domestic demand, and manufacturing growth. The IMF pointed out that India's economy demonstrated consistent momentum that countered possible trade losses, even in the face of tariff shocks from the US government. China's GDP is anticipated to decrease to 4.8 per cent in FY26, while India is expected to rise at 6.6 per cent, up from 6.5 per cent in FY25.
IMF’s Outlook on 2026 and Beyond
Despite its optimism for 2025–2026, the IMF has reduced India's growth estimate for 2026–2027 to 6.2 per cent, pointing to a possible decline of early-year momentum. Due to slower recoveries in the major economies, global economic growth is predicted to slow from 3.2 per cent in 2025 to 3.1 per cent in 2026.
Drivers of India’s Economic Performance
The IMF attributed India’s sustained expansion to:
Strong demand for consumption in both urban and rural sectors.
Revival of manufacturing and infrastructure investment, aided by government initiatives.
Fiscal resilience and reforms such as GST 2.0 are expected to enhance revenue efficiency and competitiveness.
Continued services sector exports and technology investments, which remain India’s major growth engines.
Inflation and Global Context
The IMF predicts that India's consumer price inflation would be 2.8% in 2025, indicating price stability in spite of pressures from inflation around the world. China, on the other hand, is expected to see slower output growth and more muted price increases, while the United States is expected to continue higher-than-target inflation levels.