'Tariffs can’t slow India': IMF ups growth forecast to 6.6%, ahead of China’s 4.8%
The International Monetary Fund (IMF) has raised its forecast for India’s growth in FY 2025-26 to 6.6 %, citing strong momentum in the economy that helped offset the impact of recent tariff hikes. India’s first-quarter performance demonstrated resilience thanks to robust domestic consumption, a rebound in manufacturing and expansion in services. In contrast, China’s growth is projected at 4.8 % for the same period, placing India ahead among major emerging economies. While global growth is slowing — with advanced economies expected to expand only around 1.6 % — India continues to buck the trend. The IMF, however, warns that this strong start may not guarantee sustained performance and urges structural reforms, fiscal prudence and maintenance of central bank independence to navigate future headwinds.
The Key points
- The IMF now estimates India’s FY 2025-26 GDP growth at 6.6 %, an upward revision.
- India is projected to outpace China’s growth of 4.8 % for the same fiscal year.
- The upward revision is largely driven by India’s strong first-quarter start rather than any large tariff offset.
- Despite concerns over US-imposed tariffs, their drag on India’s economy was “less severe than expected”.
- Resilient domestic demand, increased private investment and manufacturing revival underpinned the strong outlook.
- Global growth is expected to slow to about 3.2 % in 2025, with emerging markets averaging roughly 4.2 %.
- Advanced economies face significant headwinds with expected growth near 1.6 %.
- The IMF flagged risks including persistent protectionism, supply-chain disruption and labour-market shocks.
- Authorities are urged to restore fiscal buffers and preserve central-bank independence to sustain momentum.
- While India’s growth outlook is positive, the IMF emphasised that much hinges on maintaining domestic momentum rather than relying on external factors.
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