India’s economy is expected to grow by 7% in both 2026 and 2027, according to the International Monetary Fund (IMF), keeping the country among the fastest-growing major economies despite growing uncertainties. According to the institution, strong domestic demand, robust services activity and favourable demographic trends are expected to support this growth.India’s growth prospects were supported by favourable demographic dynamics, a large and expanding domestic market, and continued structural reforms, even as higher oil prices posed a challenge.“India stands out with upward revisions, reflecting sustained momentum and growing evidence of stronger growth potential supported by favorable demographic dynamics, a large and expanding domestic market, and continued structural reforms.”The forecast comes amid a series of upgrades by global agencies after India’s gross domestic product (GDP) grew 7.8% in the April-June quarter of the current financial year.
India holds its ground despite higher oil prices
The agency expects India to remain among the fastest-growing major economies, with domestic demand and services activity helping sustain momentum.“India remains among the fastest-growing major economies, with growth in 2026 projected at 7.0 percent. This reflects stronger-than-expected momentum, supported by resilient domestic demand and robust services activity.”It also highlighted how the Indian economy continued to expand despite rising oil prices. “India’s growth remained robust, underpinned by domestic demand and services, despite higher oil prices.”The improved outlook follows the stronger-than-expected GDP growth recorded in the April-June quarter, prompting several global institutions, including the World Bank, the Organisation for Economic Co-operation and Development (OECD), S&P Global Ratings, Moody’s Ratings, Fitch Ratings and the Asian Development Bank (ADB), to raise their growth estimates for India.
World Bank, OECD raise India growth forecasts
The World Bank raised its growth projection for India in 2026-27 to 7.1%, from 6.6% estimated earlier. The multilateral agency attributed the revision to strong domestic demand and exports, despite global headwinds. It expects the economy to grow by 7.2% in 2027-28.The OECD has also increased its forecast for India’s GDP growth in 2026-27 to 7.1%, from 6.3% projected in June. The revised estimate is higher than the 7% forecasts from S&P, Moody’s and ADB, while Fitch expects growth of 6.9%.Moody’s Ratings raised its forecast for India’s real GDP growth in FY27 to 7%, from 6%, citing the economy’s resilience amid the Middle East conflict.“Although we continue to expect India to grow faster than all other G-20 economies, as well as similarly rated emerging market sovereigns, risks remain,” Moody’s said.Expansion in the April-June quarter was supported by strong investment and manufacturing activity, which helped offset weakness in mining and consumer-facing services.
Global growth faces a more fragile outlook
While India has received a series of growth upgrades, the IMF has warned that the global economy’s resilience is becoming increasingly fragile and uneven.“The global economy remains resilient, but that resilience is becoming more fragile and more uneven. Growth is projected at 3.1% in 2026 and 3.4% in 2027, while inflation is expected to reach 4.7%, driven largely by higher energy and food prices.”The global outlook also presents risks for India.Higher crude oil and energy prices could fuel inflation and put pressure on household purchasing power. Below-normal monsoon rainfall could affect agricultural output and rural demand, while prolonged geopolitical tensions could disrupt supply chains and increase input costs.Despite the upward revisions to India’s growth projections, these factors remain among the risks flagged by agencies assessing the country’s economic outlook.
