India will remain ahead of China
The International Monetary Fund (IMF) has said that India will remain among the fastest growing large economies of the world in the coming years. In its World Economic Outlook (WEO) report, IMF has estimated India's GDP growth for 2025–26 at 6.6%, which is much higher than China's 4.8%. According to the report, India's strong first quarter performance also neutralized the impact of high tariffs imposed by the US. This time's estimates have increased compared to April, which shows how strong and flexible India's economy is, even though there remains uncertainty at the global level.
IMF said that the basis of India's growth is domestic consumption, increase in manufacturing and expansion of service sector. However, the report also warns that India's growth may decline slightly to 6.2% in 2026, as the initial pace may slow down in the future. According to the IMF, this increased estimate is primarily a result of the strong start to FY26, and not any direct benefit from recent tariff decisions. India's GDP stood at 6.5% in FY25 and the government has set a target of 6.36.8% for FY26.
The IMF estimates that global GDP growth will be 3.2% in 2025 and 3.1% in 2026, which is slightly less than 3.3% in 2024. The growth of developed countries will be only 1.6% and the average growth of emerging markets will be 4.2%. Spain (2.9%) and the US (1.9%) will be the fastest growing developed economies, while Japan (1.1%) and Canada (1.2%) will lag behind.
IMF said that the impact of high tariffs imposed by America on India and China was not as big as feared. India's strong domestic demand, boom in manufacturing and private investment handled the blow. The report said the impact of the tariffs was lighter than expected as India absorbed the shock through trade diversification and local demand.
The report shows that global inflation is declining, but unevenly. Price pressure still persists in America, while inflation is under control in many countries. The IMF warned that prolonged uncertainty, protectionism and shocks in the job market could weaken growth.
The IMF has asked governments to restore fiscal discipline, maintain the independence of central banks and emphasize structural reforms. The organization also said that countries should increase trade and policy coordination so that the impact of tariffs and supply chain disruptions can be reduced.
