India’s economy is expected to expand by 7 per cent in both FY27 and FY28, projected the International Monetary Fund (IMF) on Tuesday. However, IMF cautioned that the global economic outlook faces increasing risks with rising food and energy costs along with geopolitical tensions. It added that this could affect the resilience of economies across the world.
In the IMF’s latest assessment, it raised the global growth forecast for this year to 3.1 per cent, up from the 3 per cent in July. Despite the upgrade, the pace remains modest compared to the 3.5 per cent recorded by the world economy in 2025.
“The global economy remains resilient, but that resilience is becoming more fragile and more uneven,” the IMF said in its October 2026 World Economic Outlook.
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IMF on low-income developing countries
Following the release of the latest data, the IMF stated that the low-income developing countries were the most vulnerable to the impacts of the energy crisis amid the US-Iran war. It added that many had “no choice” but to spend less or face debt restructuring.
India among the fastest growing economies
As per IMF, India’s growth is stronger than expected with robust domestic demand while remaining among the world’s fastest growing economies.
According to the Fund, the global economy managed to absorb multiple shocks because of diversified energy supplies, higher output from other countries and the release of stored reserves. It also highlighted investments in artificial intelligence (AI) as key factors in sustaining economic activity.
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However, it cautioned that these sources could weaken if disruptions continue. Falling energy stalks, escalated geopolitical tensions and prolonged uncertainty could increase the pressure. “Risks are skewed to the downside,” the report said.
Slow world trade volume in 2026, says IMF
The IMF’s report forecast a slow world trade volume growth in 2026 but a balance in 2027 with enhanced production chains and continued strength in technology-related trade.
“Global imbalances are expected to decline only modestly over the medium term, as large fiscal deficits, limited domestic rebalancing, technology-driven capital flows, and differing demand compositions across major economies under current policies continue to sustain external gaps,” IMF added in its report.