IMF Upgrades India’s 2025 Growth Forecast to 7.3 percent

IMF Raises India’s 2025 Growth Forecast to 7.3%, Cites Strong Domestic Momentum

The International Monetary Fund (IMF) has upgraded India’s economic growth forecast for 2025 to 7.3% , highlighting the country’s resilience amid global trade disruptions, tariff-related uncertainties, and geopolitical headwinds. The upward revision reflects stronger-than-expected domestic performance and sustained economic momentum at a time when many major economies face slowing growth.

Drivers Behind the Upward Revision

In its latest World Economic Outlook (WEO) update , the IMF raised India’s 2025 growth estimate by 0.7 percentage point . The Fund attributed the upgrade to:

• Robust corporate earnings in the December quarter

• Solid economic activity extending into the final quarter of the fiscal year

• Improved investment sentiment

• Steady domestic demand , which has cushioned India from external shocks

These factors, according to the IMF, have collectively strengthened India’s near-term growth outlook despite a challenging global environment.

Medium-Term Growth Expected to Moderate

While optimistic about 2025, the IMF projects India’s growth to moderate to 6.4% in 2026 and 2027 . This deceleration is expected as “cyclical and temporary factors” fade. These include:

• Normalisation of post-pandemic pent-up demand

• Waning effects of short-term fiscal and monetary support

• Gradual stabilisation after a phase of above-trend expansion

The Fund emphasised that moderation does not signal structural weakness, but rather a return to a more sustainable growth trajectory.

India’s Role in the Global Economy

The IMF reiterated that India continues to be a key growth engine of the global economy , especially at a time when several advanced and emerging economies are grappling with slower expansion due to trade tensions and policy uncertainty. India’s performance stands out for its domestic-demand-led growth model , which provides relative insulation from external volatility.

The upgrade also follows a recent upward revision by the National Statistics Office (NSO), which estimated higher growth for the year ending March 2025 than earlier government projections.

Global Context and Comparative Outlook

At the global level, the IMF observed unexpected economic resilience despite US-led trade disruptions. Global growth is projected at 3.3% , supported by:

• Strong technology and artificial intelligence-led investments

• Improved investment momentum in North America and Asia

The IMF also upgraded growth forecasts for the United States and China , citing easing trade frictions and renewed business confidence, even as risks from tariffs and policy uncertainty persist.