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The International Monetary Fund (IMF) has raised India's growth forecast by 0.2 percentage points to 6.6 per cent for the 2025/26 fiscal year as the country's strong growth momentum is seen offsetting the impact of high US tariffs on Indian goods.
India's GDP grew at an unexpectedly higher pace of 7.8per cent in April-June thanks to strong private consumption, helping it remain the fastest growing major economy despite a cloudy export outlook due to steep 50 per cent tariffs imposed by US President Donald Trump.
The IMF said in its World Economic Outlook report that the upward revision for India's 2025/26 growth was on a "carryover from a strong first quarter more than offsetting the increase in the US effective tariff rate on imports from India since July".
India's financial year runs from April to March.
However, the IMF lowered India's growth forecast by 0.2 percentage points to 6.2per cent for the next fiscal year, it said in the report released in Washington.
IMF's upgrade comes a week after the World Bank raised its India growth forecast for 2025/26 to 6.5per cent from 6.3 per cent, while trimming its projection for the next fiscal year by 20 basis points to 6.3% due to U.S. tariffs.
The IMF has projected growth of emerging market and developing economies to moderate from 4.3 per cent in 2024 to 4.2 per cent in 2025 and 4 per cent in 2026.
"Beyond China, emerging market and developing economies more broadly showed strength, sometimes because of particular domestic reasons, but recent signals point to a fragile outlook there as well," it said.
Higher US tariffs are curtailing external demand and rising trade policy uncertainty is weighing on investment in major export-led economies, the report said.