India's FY26 GDP Growth Cut to 6.2% by IMF Amid Global Trade Tensions

The International Monetary Fund (IMF) has trimmed India’s GDP growth forecast for FY26 to 6.2 percent, down from 6.5 percent projected in January. The downgrade, announced in the IMF’s latest World Economic Outlook update, cites growing global uncertainty and rising trade tensions as key risks to India’s economic momentum.

“For India, the growth outlook is relatively more stable at 6.2 percent in 2025, supported by private consumption, particularly in rural areas,” the IMF said, “but this rate is 0.3 percentage point lower than the January 2025 update due to elevated trade tensions and global uncertainty.”

The IMF also revised India’s FY27 growth forecast to 6.3 percent, down from 6.5 percent. The Fund’s projections align with similar downgrades issued earlier this month by the World Trade Organization and UNCTAD.

RBI and Goldman Sachs Echo Concerns
India’s central bank, in its April policy review, lowered its own growth outlook for FY26 to 6.5 percent, down from 6.7 percent forecast in February. Separately, Goldman Sachs has cut India’s FY26 growth estimate to 6.1 percent from 6.3 percent earlier.

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Inflation Seen Easing in FY26 and FY27
Despite the growth moderation, India is expected to perform better on the inflation front. The IMF projects consumer inflation to ease to 4.2 percent in FY26, down from 4.7 percent in FY25. It is expected to decline further to 4.1 percent in FY27.
 

Growth Takes a Bigger Hit
Global growth, meanwhile, is projected to slow sharply to 2.4 percent in 2025, down from 3.5 percent in 2024. This revised estimate is 0.8 percentage points lower than the IMF’s earlier projection in January.

The downturn is largely attributed to escalating trade conflicts, particularly after U.S. President Donald Trump imposed a new wave of reciprocal tariffs on April 2—though a temporary pause was announced on April 9 for all countries except China. Since then, both the U.S. and China have raised tariff rates, pushing overall levies above 100 percent. The U.S. is expected to see growth decline by 0.9 percentage points to 1.5 percent, while China may slow by 1.3 percentage points to 3.2 percent, highlighting the widespread fallout of the tariff war.