IMF Updates India's FY27 GDP Growth Forecast To 6.4% In Latest WEO Report

The International Monetary Fund (IMF) has nudged India's growth forecast for FY27 down by 10 basis points to 6.4%, from the 6.5% projected in its April World Economic Outlook (WEO). The revision was released on Wednesday as part of the fund's July WEO update.

The IMF said India continued to be one of the world’s fastest-growing major economies, with strong private consumption and activity in the services sectors providing key support.

Why The Forecast Was Cut

The IMF's assessment presents two conflicting forces. On one side, high-frequency data through April showed considerable resilience in India's economic activity, and recent growth outturns came in better than earlier expectations. On the other hand, higher energy prices in the fund's July baseline have more than offset these positives, particularly as India has seen a greater pass-through of elevated crude prices to fuel costs at the pump.

Energy prices remain a significant concern. The IMF forecasts the average petroleum spot price index at $89 per barrel in 2026, 9% above the April baseline. Crude oil prices surge 32%, and natural gas prices rise 22% from 2025, it said. Fertiliser prices are expected to rise 26%, with food prices projected to increase 8% as a result of higher energy, fertiliser and transport costs.

Better News For FY28

The IMF is more optimistic about FY28, upgrading India's growth projection by 20 basis points to 6.7%. The fund expects the energy shock to have faded by then, with medium-term growth stabilising at around 6.5%. It anticipates a gradual closing of the output gap as the economy picks up momentum once near-term headwinds ease.

Global Picture

Globally, the IMF has revised 2026 growth down to 3%, from 3.1% in April. The West Asia conflict is still the main drag, but a strong technology cycle driven by AI investment and adoption is partially softening the blow. Energy exporters outside the conflict zone are enjoying better terms of trade while energy importers with limited exposure to the technology sector are facing the strongest headwinds. Different countries are benefiting in different ways according to their energy trade positions and their integration into the global technology supply chain.

The IMF noted that risks remain tilted to the downside, with a potential re-escalation of geopolitical tensions posing the biggest threat. However, a smoother reopening of the Strait of Hormuz and lower-than-expected commodity prices could improve the outlook for growth and inflation alike.

The RBI had separately revised its FY27 growth projection to 6.6% last month, citing risks from the West Asia conflict, elevated crude prices and weather uncertainties.

Also Read- Alpine Texworld IPO To Open On 14 July; Price Band Fixed At ₹100-105