India will remain among the world’s fastest-growing major economies, with its GDP projected to expand by 6.4 per cent in FY2026-27, supported by strong private consumption and robust services sector activity, according to the International Monetary Fund’s (IMF) July 2026 World Economic Outlook (WEO) Update.
The IMF said India continues to outperform most major economies despite an expected moderation in global growth amid trade disruptions and geopolitical uncertainties.
Globally, economic growth is projected to slow to 3.0 per cent in 2026 before recovering to 3.4 per cent in 2027. World trade volume growth is also expected to decelerate sharply from 5.0 per cent in 2025 to 3.5 per cent in 2026, before improving to 4.3 per cent in 2027.
According to the IMF, the slowdown reflects earlier front-loading of trade activity, the drag from higher tariffs, and the gradual adjustment of global trade linkages and production chains through trade diversion and rerouting.
Growth across emerging markets and developing economies is projected to ease to 3.8 per cent in 2026 before recovering to 4.5 per cent in 2027.
Among Asian economies, China’s growth is projected to slow to 4.6 per cent in 2026 due to higher oil prices and persistent structural headwinds. Vietnam’s growth forecast has been revised upward to 7.5 per cent, while Malaysia is expected to expand by 4.7 per cent, supported by the global technology cycle.
In the United States, economic growth is projected at 2.3 per cent in 2026 and 2.2 per cent in 2027, broadly unchanged from the IMF’s April forecast.
“Activity is supported by fiscal policy, accommodative financial conditions, and continued technology-related business investment and productivity strength, with only limited impact from the war given the country’s net energy exporter status,” the IMF said.
Growth in the euro area is projected at 0.9 per cent in 2026, 0.2 percentage points lower than the April forecast, reflecting weaker carryover from the first quarter, higher energy prices and subdued consumer confidence.
The United Kingdom’s economy is expected to grow by 1.0 per cent in 2026, while Japan’s growth is projected at 0.6 per cent. South Korea is forecast to expand by 2.6 per cent, supported by strong demand for semiconductors.
In the Middle East and Central Asia, growth is projected to slow sharply to 0.7 per cent in 2026 before rebounding to 6.5 per cent in 2027, following a prolonged closure of the Strait of Hormuz.
Among major commodity-producing economies in the region, Iraq, Kuwait and Qatar are expected to witness sharp economic contractions in 2026, while Saudi Arabia’s economy is projected to grow by 1.7 per cent. Iran’s growth forecast has been revised upward to negative 5.4 per cent.
The IMF also cautioned that the steady decline in global inflation is expected to pause.
“Headline inflation is projected to rise from 4.1 per cent in 2025 to 4.7 per cent in 2026 before easing to 3.9 per cent in 2027, with the increase for 2026 driven mainly by higher energy and food prices,” the report said.
Core inflation is expected to moderate only gradually. The IMF estimates that inflation targets will be achieved by mid-2027 in the United Kingdom, by the end of 2027 in both the United States and Japan, and only in 2028 in the euro area. Inflation in China is also expected to rise from its current low levels.
(ANI)
