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The International Monetary Fund (IMF) has projected India's economy to grow by 7 per cent in both FY27 and FY28, even as it warned that the resilience of the global economy is becoming increasingly fragile amid higher energy and food prices and geopolitical uncertainty.
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, projecting global growth at 3.1 per cent in 2026 and 3.4 per cent in 2027. The Fund expects global inflation to rise to 4.7 per cent in 2026, driven largely by higher energy and food prices, before easing to 4.1 per cent in 2027. India remains among the fastest-growing major economies, with the IMF attributing its growth outlook to stronger-than-expected momentum, resilient domestic demand and robust services activity. The report projects India's growth at 7 per cent in both FY27 and FY28. However, the global outlook remains uneven, with the impact of the energy shock differing across countries depending on their exposure to the conflict in the Middle East, commodity prices and the strength of technology-related investment. The IMF said the global economy had withstood repeated shocks partly because of flexible energy supplies, increased production in other countries, the use of inventories and a shift towards alternative energy sources. Investment linked to artificial intelligence has also supported economic activity and international trade. But the Fund warned that these sources of support may not be sufficient if disruptions persist. It said dwindling energy inventories, further geopolitical shocks and prolonged uncertainty could weigh on confidence and economic activity. Risks are skewed to the downside, the report said, warning that a prolonged stalemate or further escalation in the Middle East could keep energy and food prices elevated, revive inflationary pressures and weaken growth. The report also projected that world trade volume growth would slow in 2026 and stabilise in 2027, reflecting the impact of tariffs, adjustments in production chains and continued strength in technology-related trade. Against this backdrop, it said, 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, the report added. The IMF also flagged the risk of a sharp reassessment of artificial intelligence-related investment returns, which could reduce investment, trigger equity market corrections and tighten financial conditions. The report points to the need for economies to rebuild policy buffers and strengthen their capacity to withstand future shocks as higher borrowing costs and elevated public debt limit governments' room to respond. (ANI)
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