IMF to upgrade India outlook in January, calls it as ‘key growth engine for global economy’

The International Monetary Fund views India's economic performance as “strong and resilient”, according to IMF spokesperson Julie Kozack, who said the country remains a “key growth engine for the global economy”, ANI reported.

Speaking at a media briefing on 15 January, Kozack said the IMF may revise its growth forecast for India upwards in the near term, it added. She also heads the IMF's Communications Department (COM).

What did IMF say on Indian economy?

Kozack noted that the latest economic data from India has come in stronger than expected, reinforcing the country's role as a major driver of global growth.

She stated, “So what we have seen in India is that India is a key growth engine for the world. India's growth in 2025, when we did our Article IV staff report, we had estimated growth for fiscal year 25-26 at 6.6 per cent, which is based on the strong consumption growth.”

She further pointed out that since the release of the Article IV report, India's third-quarter growth has turned out to be stronger than anticipated. This development has increased the likelihood that the IMF may revise its growth forecast for India upwards in the near term.

“What we have seen since then is that the third quarter growth in India came out stronger than expected, and that makes it likely that we will be upgrading our forecast going forward,” Kozack said.

IMF to update India outlook later in January?

She added that the IMF is set to release its January real update in the coming days, during which a revised growth number for India will be announced. "We have our January real update coming in the next few days, so we will have a revised growth number for India at that time," she stated.

Highlighting the broader picture, Kozack said that the IMF's overall assessment of India remains positive. According to her, the country has consistently played a key role in supporting global growth, even amid challenging international economic conditions.

"The bottom line for us on India is that it has been a key driver of global growth, and growth has been quite robust in India," she said.

The IMF's latest remarks reflect continued confidence in India's economic fundamentals, with strong domestic consumption acting as a major pillar of growth. The upcoming update is now keenly awaited, as it may further strengthen India's position as one of the fastest-growing major economies in the world.

Statistics ministry estimates India's economy likely to grow 7.4%

On 7 January, the statistics ministry estimated that India’s economy is likely to grow 7.4% in the current financial year, supported by strong growth in manufacturing and services output, healthy household spending and strong investments in fixed assets.

This is above the 6.3-6.8% growth the government projected for this fiscal in the Economic Survey 2024-25. While GDP in real terms exceeded expectations, growth in nominal terms is lagging behind the 10.1% projected in the union budget for the current year. The first advance estimate released this month projected an 8% nominal growth, the softest since the pandemic slump of 2021.

The softer nominal GDP growth is not surprising given that consumer price index (CPI) based inflation remains below RBI’s target of 4%, aided by a fall in food prices.

Retail price inflation stood at 1.3% in December. RBI last month projected CPI-based inflation at 2% for the current financial year.

Sequential deflation in food prices continued for six months out of the nine months in FY 2026, resulting in overall inflation to remain benign, according to Rumki Majumdar, Economist, Deloitte India.

“Although inflation in December was high relative since August 2025, overall, the inflation trajectory stays comfortable and will likely stay so through the rest of FY26. That said, core inflation has remained sticky at 4.57% in December 2025, staying above the 4% mark for 11 consecutive months, led by sustained price pressures in personal care and related categories,” said Majumdar.

This comfortable headline comfort gives the RBI adequate room to manoeuvre on policy rates, should further easing be required to support growth, added Majumdar.

(With inputs from ANI)