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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 estimates India's economy to grow by 7.3 per cent in 2025, followed by 6.4 per cent in both 2026 and 2027, significantly outperforming global and advanced economy averages. On the contrary, world economy is projected to expand at 3.3 per cent in 2025 and 2026, before easing slightly to 3.2 per cent in 2027. India's robust outlook is underpinned by resilient domestic demand, sustained public investment, and a gradual recovery in private capital expenditure. Compared to other major economies, India's growth trajectory remains notably 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 a modest 1.3 per cent. Among emerging and developing Asian economies, India continues to lead, outpacing regional peers and contributing significantly to Asia's projected 5.0 per cent growth in 2026. The IMF notes that 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. "In India, growth is revised upward by 0.7 percentage point to 7.3 percent for 2025, reflecting the better-than expected outturn in the third quarter of the year and strong momentum in the fourth quarter. Growth is projected to moderate to 6.4 percent in 2026 and 2027 as cyclical and temporary factors wane," IMF said. IMF said inflation in India is expected to go back to near target levels (2-6 per cent) after a marked decline in 2025 driven by subdued food prices. On the global economy, it said headwinds from shifting trade policies are offset by tailwinds from surging investment related to technology, including artificial intelligence (AI), more so in North America and Asia than in other regions, as well as fiscal and monetary support, broadly accommodative financial conditions, and adaptability of the private sector. (ANI)
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