The International Monetary Fund (IMF) has uplifted India’s gross domestic product (GDP) growth forecast by 0.2 percent to 6.6 percent for the fiscal year 2025-26. This uptrend projection from 6.4 percent was all because of India’s growing domestic demand, which has also saved the economy from the impact of US tariffs.
A warning of risks for the global financial markets due to rising trade tensions and rising debt has also been issued by the IMF.
India’s economic outlook
According to the IMF, India is assured to remain the world’s fastest-growing economy among all the developing countries. The GDP of the country rose by 7.8 percent in April-June.
The rise in GDP was majorly for the increasing domestic demand, which offset the negative impact of 50 percent tariffs imposed by US President Donald Trump.
However, the IMF estimates a slight change in India’s growth, forecasted by 0.2 percentage points to 6.2 percent for FY26-27
IMF’s warning for the global markets
IMF’s optimistic viewpoint for India is set against a major backdrop of increasing global uncertainty.
Escalating trade tensions and the imposition of tariffs are seen as a potential threat to the global economy. The IMF warns that if this issue lingers, it could possibly disrupt supply chains, depress investments, and ultimately lower global output. Even though the immediate impact of this on the Indian economy is not significant, the country is not entirely protected from these external disturbances.
Rising debt and financial instability can be a major problem for the global market, warns the IMF. A sudden increase in borrowing costs has been noticed, which could lead to a disorderly market correction. This problem could also increase market volatility for India.
Though the Indian economy is growing at a good rate, irrespective of the ongoing global problems, the path forward would still require steady and confident policy management to fight the challenges of global trade tensions and rising debt levels.
