IMF ups India’s FY26 growth forecast to 6.6% on strong start to the year

India’s economic engine continues to roar as the International Monetary Fund (IMF) has revised the country’s FY26 growth forecast upward to 6.6%, from 6.4% projected earlier in July. The latest upgrade, published in the IMF’s October World Economic Outlook, reflects the strong momentum from India’s 7.8% first-quarter expansion, the fastest in over a year. 

The global lender credited resilient domestic demand, buoyant services exports, and robust investment activity for the country’s outperformance, reaffirming India’s position as the world’s fastest-growing major economy.

Strong Q1 Momentum Boosts Forecast

The IMF noted that India’s economy expanded by 7.8% in the first quarter of FY26, the fastest pace in over a year. The upbeat performance was driven by robust domestic demand, booming service exports, and strong investment momentum. The agency said, “The carryover from a strong first quarter more than offset the impact of higher US tariffs on Indian imports.”

India’s growth momentum is expected to stay firm, with Q2 expansion likely around 7%, keeping the country well ahead of global peers.

Global Agencies Follow IMF’s Optimism

The IMF’s upgrade aligns with recent revisions by other global institutions. The World Bank recently raised India’s FY26 growth estimate to 6.5% from 6.3%, while the Reserve Bank of India (RBI) also lifted its forecast to 6.8% from 6.5%.

Inflation Outlook Eases Sharply

Adding to the positive outlook, the IMF sharply cut India’s FY26 inflation forecast to 2.8%, down from 4.2% in April. Retail inflation dropped to an eight-year low of 1.54% in August, marking the second consecutive month below 2%.

With growth surging and prices cooling, India remains firmly positioned as the world’s fastest-growing major economy heading into FY26.