India to Remain Fastest Growing Major Economy in 2026, 2027: IMF

India is set to retain its position as the world’s fastest-growing major economy over the next two years, even as global growth shows signs of moderation, according to the International Monetary Fund’s (IMF) World Economic Outlook Update released in January 2026.

The IMF has projected India’s economy to expand by 7.3 per cent in 2025, followed by growth of 6.4 per cent in both 2026 and 2027. These figures place India well ahead of global and advanced economy averages.

In comparison, the global economy is expected to grow at 3.3 per cent in 2025 and 2026, before easing slightly to 3.2 per cent in 2027. Advanced economies are projected to grow at a significantly slower pace, underscoring India’s strong relative performance.

The IMF attributed India’s robust growth outlook to resilient domestic demand, sustained public capital expenditure, and a gradual recovery in private investment. It noted that growth for 2025 has been revised upward by 0.7 percentage points, reflecting better-than-expected economic performance in the third quarter and strong momentum in the final quarter of the year.

“Growth is projected to moderate to 6.4 per cent in 2026 and 2027 as cyclical and temporary factors wane,” the IMF said.

Among major global economies, India’s growth outlook remains markedly stronger. The United States is projected to grow at 2.4 per cent in 2026, China at 4.5 per cent, and the Euro Area at just 1.3 per cent.

India also continues to lead among emerging and developing Asian economies, contributing significantly to Asia’s projected growth of 5.0 per cent in 2026. Emerging market and developing economies as a group are expected to grow at 4.2 per cent in 2026, well below India’s projected pace.

On inflation, the IMF said price pressures in India are expected to return close to the target range of 2–6 per cent following a sharp decline in 2025, largely driven by lower food prices.

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Commenting on the global outlook, the IMF noted that headwinds from shifting trade policies are being offset by strong investment momentum linked to technological advances, particularly in artificial intelligence. These tailwinds are more pronounced in North America and Asia, supported by accommodative financial conditions, fiscal and monetary support, and the adaptability of the private sector.

Overall, the IMF said India’s economic trajectory positions it as a key driver of global growth in the coming years, even as the world economy navigates a period of slower expansion.

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