India's GDP growth projected to be at 6.5% in 2025 and 2026: IMF's World Economic Outlook report

The International Monetary Fund has projected that India’s economic growth will hold steady at 6.5% in 2025 and 2026, staying in line with earlier estimates. 

According to the IMF’s latest World Economic Outlook update, this forecast reflects India’s potential and follows a slowdown from an 8.2% growth rate in 2023 to 6.5% in 2024.

Slower but steady expansion

The IMF’s report indicates that India’s growth in 2024 was affected by a sharper-than-expected dip in industrial activity.

Despite this deceleration, the economy is now expected to maintain a steady pace over the next two years, supported by ongoing reforms and rising consumer demand. Economists say this momentum will keep India among the world’s fastest-growing major economies.

Global trends and regional differences

IMF Chief Economist Pierre-Olivier Gourinchas has highlighted that the global economy is generally holding steady, with some nations doing better than others. The IMF expects global growth to remain at 3.3 % in 2025 and 2026, below the pre-pandemic average of 3.7% but still a sign of resilience. 

The United States is performing better than anticipated, thanks to strong domestic demand, while European nations are dealing with sluggish activity and elevated energy costs. China is set for a modest recovery, with its growth revised up to 4.5% next year.

Inflation and possible policy shifts

The IMF forecasts that global headline inflation will decline to 4.2% in 2025 and 3.5% in 2026. Gourinchas said monetary policy must stay flexible so central banks can balance the need to lower inflation against the risk of harming growth. 

Some central banks are ready to raise rates further if necessary, while others may shift toward easing if inflation shows clear signs of cooling. All eyes are now on the Reserve Bank of India, which may consider a rate cut in the coming months if inflation continues to moderate.

World Bank projections

India’s outlook has also been endorsed by the World Bank, which has placed the country’s growth at 6.5% for the current fiscal year and 6.7% for the next two. 

Its latest Global Economic Prospects report credited the strong services sector and supportive policies aimed at bolstering the manufacturing industry for keeping India at the top of the growth charts among major economies.

Experts say India’s growth story remains robust despite global headwinds. The IMF’s focus is now on how policymakers handle inflation, maintain fiscal balance, and encourage further reforms to strengthen industrial production.

While challenges such as high energy costs and uneven global demand persist, the latest forecasts suggest that India is well-positioned to stay on a healthy growth path through 2026.