India is set to retain its position as the world’s fastest-growing major economy over the next two years, even as global growth moderates and several large economies struggle to regain momentum, according to the International Monetary Fund’s latest World Economic Outlook Update released in January 2026.
The IMF estimates India’s economy will grow by 7.3 per cent in 2025, followed by 6.4 per cent in both 2026 and 2027, significantly outperforming global averages. In comparison, the global economy is projected to expand at 3.3 per cent in 2025 and 2026, easing slightly to 3.2 per cent in 2027, highlighting the widening growth gap.
Advanced economies are expected to grow at a subdued pace of around 1.7–1.8 per cent. The United States is projected to expand by 2.4 per cent in 2026, while the Euro Area is forecast at 1.3 per cent, and Japan remains weaker due to structural challenges.
China’s growth is also slowing, with projections of 4.5 per cent in 2026 and 4.0 per cent in 2027, marking a shift in Asia’s growth dynamics in India’s favour.
The IMF attributed India’s strong outlook to resilient domestic demand, sustained public investment, and improving private capital expenditure, noting that inflation is expected to return close to target levels, reinforcing India’s macroeconomic stability.
