IMF Upgrades India FY27 Growth Forecast to 7 Percent
- •The International Monetary Fund raised India's FY27 growth forecast to 7 percent, driven by stronger-than-expected momentum and resilient domestic demand.
- •India continues to remain among the fastest-growing major economies globally despite higher projected crude oil prices.
- •Inflation is expected to average 5 percent in FY27, up from 2 percent in FY26, before easing to 4.4 percent in FY28.
- •Recent trade agreements with the European Union and the United Kingdom are expected to lower trade barriers and boost supply-chain resilience.
Key Questions Answered
The International Monetary Fund (IMF) raised its growth forecast for India to 7 percent for FY27, which is up from the 6.4 percent previously projected in July. Furthermore, the IMF expects growth to hold steady at 7 percent in FY28, reflecting a 0.3-percentage-point upgrade from its earlier estimates.
The IMF attributed the positive upgrade to stronger-than-expected momentum driven by resilient domestic demand and robust services activity. Additional supporting factors include favourable demographics, a large and expanding domestic market, and continued structural reforms.
Inflation is projected to average 5 percent in FY27, rising from 2 percent in FY26 before easing to 4.4 percent in FY28. Meanwhile, the current account deficit is expected to widen to 1.5 percent of GDP in FY27 from 0.7 percent last fiscal, before narrowing to 1.3 percent in FY28.
