The IMF has slightly lowered India’s 2026 growth forecast to 6.4 per cent, citing higher global oil prices linked to the Middle East conflict…reports Asian Lite News Desk
India’s economy has remained resilient despite the impact of higher global oil prices triggered by the conflict in the Middle East, the International Monetary Fund (IMF) said on Wednesday, while marginally lowering its growth forecast for 2026 and projecting stronger expansion in 2027 as energy-related pressures ease.
In its latest World Economic Outlook (WEO) Update, the IMF revised India’s growth forecast for 2026 down by 0.1 percentage point from its April projection to 6.4 per cent. At the same time, it raised its forecast for 2027 by 0.2 percentage point, reflecting expectations of stronger growth once the impact of elevated energy prices subsides.
Presenting the report, IMF officials said India had performed better than many economies in navigating global uncertainty, supported by resilient domestic demand and stronger-than-expected economic activity, although higher energy costs would weigh on growth this year.
“For India, we have the forecast for this year revised down very slightly by 0.1 percentage point to 6.4. And growth for next year, for 2027, revised upward by 0.2 percentage point,” IMF Research Department Division Chief Deniz Igan told reporters during a press briefing.
Explaining the revised outlook, Igan said recent economic data had exceeded expectations and high-frequency indicators through April pointed to continued resilience in overall economic activity.
“On the upside, we have the better-than-expected outturn in the most recent data. But we also have high-frequency indicators through April showing quite a bit of resilience in overall economic activity,” Igan said.
However, she noted that the positive momentum had been offset by the impact of higher energy prices incorporated into the IMF’s latest baseline projections.
“But these positive effects are then more than offset for 2026 by the higher energy prices we have in our baseline in the July Update, as well as the greater pass-through of those higher oil prices to prices at the pump in India,” she said.
The IMF expects those pressures to moderate next year, supporting stronger growth.
“Moving into 2027, we are expecting (India’s growth) strengthening with the energy shock dissipating and medium-term growth being estimated at around 6.5 per cent and output closing. We expect some pickup there,” Igan said.
The updated projections for India were released alongside the IMF’s latest assessment of the global economy. The Fund kept its global growth forecasts broadly unchanged at 3 per cent for 2026 and 3.4 per cent for 2027, saying the global economy had so far weathered the impact of the Middle East conflict better than initially anticipated.
“The global outlook is being shaped by two powerful forces pulling in opposite directions: the lingering effects of the energy shock from the war in the Middle East and a technology-driven investment boom,” IMF Deputy Research Director Petya Koeva Brooks said in her opening remarks.
Brooks said the IMF continued to expect a “V-shaped recovery” in the global economy, with slower growth this year followed by a stronger rebound in 2027. However, she cautioned that risks remained “very much on the downside”, warning that any renewed escalation of the conflict could lead to higher oil prices, tighter financial conditions and increased volatility in global financial markets.
The IMF also raised its global headline inflation forecast to 4.7 per cent for 2026, noting that the disinflation trend observed since early 2024 had stalled. At the same time, it said increased investment in artificial intelligence was helping offset some of the economic impact of higher energy prices, particularly for economies integrated into global technology value chains.
India imports more than 80 per cent of its crude oil requirements, making international energy prices an important factor influencing inflation, the current account balance and overall economic growth. The IMF noted that any prolonged disruption to oil shipments through the Strait of Hormuz could increase India’s import costs and place renewed pressure on domestic fuel prices.
