IMF cuts India growth to 6.4%, still fastest-growing

Published 8 July 2026 · tech

Global growth slows amid war and AI-driven shifts Live Events Domestic demand to anchor India's expansion RBI growth forecast as a Reliable and Trusted News

Global growth slows amid war and AI-driven shifts Live Events Domestic demand to anchor India's expansion RBI growth forecast as a Reliable and Trusted News Source Addas a Reliable and Trusted News Source Add Now! (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel India remains among the fastest growing major economies, despite a marginal downgrade to its near-term growth outlook, the International Monetary Fund (IMF) said in its July 2026 World Economic Outlook (WEO) Update, projecting the country's economy to grow 6.4% in FY26-27, down from the 6.5% projected in April, before accelerating to 6.7% in FY27-28, up from the earlier projection of 6.5%.The FY26-27 projection is 0.1 percentage point lower than the IMF's April forecast, while the FY27-28 estimate has been revised up by 0.2 percentage point.“India remains among the fastest-growing major economies, with growth projected at 6.4 percent, supported by strong momentum in private consumption and services activity," the report said.The global lender expects world growth to moderate to 3.0% in 2026 from an average of 3.5% recorded during 2024-25 before recovering to 3.4% in 2027.According to the report, the modest slowdown reflects "the effects of the war in the Middle East being partly offset by accelerated demand-driven momentum in the global technology cycle thanks to advances in artificial intelligence (AI) and its adoption."While the global growth in 2026 and 2027 remain broadly unchanged on a cumulative basis compared with the forecasts in the April 2026 World Economic Outlook (WEO), the IMF said the underlying picture has become increasingly uneven, with countries' performance depending largely on their exposure to the Middle East conflict and their position in the global technology value chain.“Energy exporters outside the conflict zone benefit from favorable terms of trade, whereas economies plugged into the technology-led upturn experience stronger activity even if they are energy importers. In contrast, activity weakens for energy importers with limited participation in the technology value chain, a group that includes many low-income countries,” the report noted.For India, however, domestic demand remains the key growth driver.The IMF's projections indicate that robust household consumption and resilient services activity are expected to continue supporting economic expansion despite a more challenging global environment marked by higher commodity prices, persistent geopolitical uncertainty and slower global trade.India's economic growth accelerated to 7.7% in 2025-26 from 7.1% a year earlier, as per government data. The economy expanded 7.8% in the January-March quarter of FY26, compared with 8% in the previous quarter.The Reserve Bank of India in its June Monetary Policy Committee headed by the Governor Sanjay Malhotra lowered its FY27 GDP growth forecast to 6.6% from 6.9%, citing rising risks from the ongoing West Asia conflict, elevated energy prices, supply disruptions and weather-related uncertainties.The central bank now expects GDP growth of 6.6% in the first quarter, 6.3% in the second quarter, 6.5% in the third quarter and 6.8% in the fourth quarter of FY27.