IMF sees India among fastest-growing major economies, pegs FY27 GDP growth at 6.4%

US-based multilateral lender International Monetary Fund (IMF) now pegs India's GDP growth at 6.4 per cent in FY27 and a higher 6.7 per cent in the next financial year. Earlier, it had estimated India's GDP growth at 6.5 per cent each in the current (FY27) as well as the next financial year (FY28).

The IMF projected global economic growth at 3.0 per cent in 2026 and 3.4 per cent the next year. That is a notch below its earlier estimate of average 3.5 per cent expansion in 2024-25.

The latest estimates come at a time when fresh escalations in the Middle East continue to create ripples across world markets, forcing economists to revise their growth forecasts. Earlier on Wednesday, US President Donald Trump reportedly said that the ceasefire in the region was "over" as America was no longer interested in exploring a permanent truce with Iran. This week, the US launched fresh strikes on Iran, blaming the Middle Eastern country for violating the truce, which triggered Tehran's retaliatory action against multiple countries in the region.

The renewed geopolitical tensions appeared to have broken a fragile ceasefire established between the US and Iran last month when both sides signed a 14-point interim deal.

The IMF's projection for the current financial year is lower than the Reserve Bank of India's 6.6 per cent forecast.

The country's central bank pegs growth at:

• 6.6 per cent in Q1
• 6.3 per cent in Q2
• 6.5 per cent in Q3
• 6.8 per cent in Q4

In its last bi-monthly policy review in June, the RBI mentioned three aspects that continue to pose downside risks to the domestic growth outlook.

These are:

• Prolonged global supply chain disruptions (owing to the Middle East conflict)
• Global financial market volatility
• Weather-related shocks (owing to El Nino)

India retains fastest-growing major economy tag

The IMF noted that India remains one of the fastest-growing major economies despite a small downgrade in the near-term outlook.
It now sees the country's economic growth being supported by strong private consumption and services activity.

What impacted IMF's global growth forecast

According to the IMF, the 2026 global growth forecast is impacted by the Middle East war, though its fallout is partly offset by Artificial Intelligence (AI)-led tech investment.

The overall world economic forecast, according to the IMF, remains broadly unchanged on a cumulative basis compared to its April 2026 outlook.

However, it mentioned that the impact varies sharply by country, noting that nations that are more exposed to the West Asia conflict and those higher up the global technology value chain are seeing very different growth outcomes.

In the Middle East and North Africa (MENA) region, the IMF now sees GDP growth averaging 0.7 per cent from its earlier projection of 1.9 per cent and then recovering to 6.5 per cent next year.

Market Overview: Wall Street and beyond...

US share markets began the day with a gap-down start -- as indicated by Dow Jones Industrial Average (DJIA) futures -- with the headline index trading 1.5 per cent lower in early deals. The S&P 500 was down 0.8 per cent while the tech stocks-heavy Nasdaq Composite was down 0.7 per cent.

Earlier in the day, Dalal Street benchmarks plunged more than two per cent each, with the Sensex shedding 1,677.1 points to close at 76,503.6 and the Nifty50 sliding 516.7 points to settle at 23,882.1. The market-wide sell-off wiped out Rs 8.77 lakh crore of investors' wealth on Dalal Street.