India's Growth Outlook Strengthens as IMF Raises FY27 Forecast to 7%

New Delhi, Oct 13 (KNN) The International Monetary Fund (IMF) has raised India’s gross domestic product (GDP) growth forecast for FY27 by 60 basis points to 7 per cent, citing resilient domestic demand and robust services activity.

In its October 2026 World Economic Outlook (WEO), released on Tuesday, the Fund also raised its growth projection for FY28 by 30 basis points to 7 per cent, from 6.7 per cent estimated in July. The revisions reflect stronger-than-expected economic momentum, supported by domestic consumption and services activity, according to the report.

The IMF attributed India’s growth potential to favourable demographic trends, a large and expanding domestic market, and continued structural reforms. India remains among the fastest-growing major economies, it said.

The revised outlook follows upgrades by other institutions. The Reserve Bank of India (RBI) and the World Bank raised their FY27 growth projections to 7.1 per cent last week, slightly above the IMF’s estimate.

Inflation And Current Account Outlook

The IMF expects India’s consumer price index (CPI) inflation to average 5 per cent in FY27 before easing to 4.4 per cent in FY28. The FY27 projection is below the RBI’s latest estimate of 5.2 per cent for the current financial year.

The Fund also expects India’s current account deficit to widen to 1.5 per cent of GDP in FY27, from 0.7 per cent in FY26, before narrowing to 1.3 per cent in FY28.

Higher energy prices remain a potential source of pressure for the Indian economy, which depends heavily on imports to meet its crude oil requirements. The IMF’s outlook assumes an average crude oil price of USD 95.74 per barrel in 2026, about 41 per cent higher than in 2025, before easing to USD 87.39 per barrel in 2027.

Sustained high oil prices could raise the import bill, put pressure on the current account and add to domestic inflation, while increasing input costs for businesses and affecting household purchasing power.

Global Growth Outlook

The IMF raised its global growth forecast for 2026 by 10 basis points to 3.1 per cent, compared with 3.5 per cent in 2025. Its projection for 2027 remained unchanged at 3.4 per cent.

Growth in advanced economies is projected at 2.1 per cent in 2026, compared with 2 per cent in 2025. Emerging market and developing economies are expected to grow by 3.7 per cent in 2026, down from 4.5 per cent in 2025, before recovering to 4.4 per cent in 2027.

The Fund expects global inflation to reach 4.7 per cent in 2026, driven largely by higher energy and food prices, before moderating to 4.1 per cent in 2027.

The IMF said geopolitical developments and technological advances were reshaping the global economy, although their longer-term effects remained uncertain. Investment linked to artificial intelligence has supported activity in some economies, but its benefits have been unevenly distributed.

Geopolitical tensions and the possibility of further energy price increases remain key risks to the global growth and inflation outlook.

(KNN Bureau)