IMF Slashes India’s FY26 Growth Forecast To 6.2 Per Cent Amid Global Trade Tensions

The International Monetary Fund (IMF) on Tuesday (22 April) revised India’s economic growth forecast for the fiscal year 2025-26 to 6.2 per cent, down from its earlier estimate of 6.5 per cent in January.

The reduction reflects growing concerns over global trade tensions and domestic economic headwinds, reported ANI.

The IMF cited trade disruptions, particularly reciprocal tariffs imposed by the United States, as key contributors to the subdued outlook.

"Our assessment is that the global financial stability risk has increased significantly due to heightened economic policy uncertainty and rising market volatility. The decline in investor confidence that we have seen has triggered recent sell-offs in equity markets. The tightening of global financial conditions is putting downside pressure on economic activity,” said IMF Financial Counsellor Tobias Adrian.

Despite the lowered forecast, the IMF acknowledged a degree of resilience in the Indian economy, supported by private consumption in rural areas.

However, at 6.2 per cent, the forecast still trails the Reserve Bank of India’s (RBI) more optimistic projection of 6.5 per cent.

RBI Governor Sanjay Malhotra remained upbeat while announcing the Monetary Policy Committee’s stance earlier this month.

He stated that the agriculture sector is expected to perform well this year due to healthy reservoir levels and strong crop production.

He added that manufacturing was gaining momentum and the services sector continued to support growth.

However, he conceded that growth is improving after a weak performance in the first half of the last financial year, although it still remains below the level the country aspires to achieve.

Meanwhile, Morgan Stanley has flagged a downside risk of 30-60 basis points to its 6.5 per cent estimate, and EY India has projected a sharper decline, estimating GDP growth at just 6 per cent for FY26.

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