IMF, World Bank Turn Bullish on India: Growth Outlook for FY26 Raised Amid Global Headwinds The back-to-back upgrades by the IMF and World Bank reflect growing international confidence in India's economic fundamentals.

After the World Bank, the International Monetary Fund has raised India's GDP growth forecast for India for FY25 from 6.4% to 6.6%. In its latest World Economic Outlook, the IMF upgraded India's GDP forecast by 20 bps. Similarly, the World Bank raised India GDP growth forecast from 6.3 to 6.5% recently riding on the back of robust growth momentum, strong consumption, continued tax reforms, and a stable investment environment.

The back-to-back upgrades reflect growing international confidence in India's economic fundamentals. The country remains the world's fastest-growing major economy and continues to anchor growth in the broader South Asian region, which the IMF said will be the fastest-growing emerging market bloc this fiscal year.

International Monetary Fund Chief Kristalina Georgieva on Monday heaped praise on India for carrying out bold reforms and said, " I'm very big on India because of the boldness of their reforms. For example, everyone told India that digital identity on a mass scale could not be done... but India proved them wrong," she said Monday.

"India's structural growth story remains intact with reforms, capex momentum, and low inflation providing strong tailwinds to India's growth" Inderbir Singh Jolly, CEO, PL Wealth Management said.

Momentum from a Strong First Quarter

India's strong showing in the first quarter of FY26 when GDP surged 7.8%, the highest in five quarters—has provided a solid foundation for this optimism. Growth was driven by robust performance in services, manufacturing, and construction, sectors that together account for nearly two-thirds of India's economy.

"The recent 50% U.S. tariff on Indian exports, along with external headwinds, will pose some risks in the months ahead. However, with ongoing reforms, policy support, and inflation remaining relatively benign, India's macroeconomic story continues to be among the strongest and most compelling globally. For real estate, this stable macroeconomic environment, stable interest rates, coupled with urbanization trends and government housing initiatives, presents significant opportunities," Samyak Jain, Director, Siddha Group said.

According to the IMF, this momentum is likely to carry forward into the second quarter, offsetting some of the impact from global headwinds such as high tariffs imposed by the U.S. President Donald Trump's administration.

Sinha added that the economy's strong domestic demand is acting as a buffer. "India's first-quarter numbers show that domestic drivers-consumption, investment, and government expenditure remain resilient. Even with external shocks, the country is well-placed to sustain growth above global averages," she said.

Balanced Growth Across Sectors

The encouraging aspect of India's current growth phase, economists say, is its broad-based and balanced nature. Both the manufacturing and construction sectors have expanded close to 8%, while services are growing above 9%, indicating that multiple engines are propelling the economy forward.

"We remain hopeful that via ongoing trade negotiations, the secondary tariffs on Indian imports will be removed. Under such a scenario, we expect GDP growth for FY26 to be 6.5%. However, if the 50% tariff persists, growth may fall below 6%," said Rajni Sinha, Chief Economist, CareEdge.

According to Jain, the growth in FY25-26 growth is likely to be steady & above global peers - providing a solid foundation for corporate earnings expansion and equity market performance. "This sustained economic growth will continue to drive real estate demand, particularly in tier-1 and tier-2 cities, supporting both residential sales and commercial real estate investments," he added.

Policy Continuity and Reform Momentum

Both the IMF and the World Bank highlighted India's policy continuity and reform momentum as key enablers of sustained growth. The World Bank noted that the Goods and Services Tax (GST) continues to streamline logistics and boost state revenues, while production-linked incentive (PLI) schemes are spurring private investments in manufacturing.

Economists believe this mix of consumption-led demand and policy-backed investment will keep India's growth trajectory steady over the next few quarters. "Even amid external shocks such as tariffs and slower global trade, India's internal engines are strong enough to deliver consistent growth in the 6.5–7% range," said an IMF official familiar with the outlook.

The Road Ahead

While the outlook remains positive, experts caution that sustaining momentum will be key. Rising oil prices, potential delays in tariff rollbacks, and uneven monsoon patterns could pose near-term challenges.

Nevertheless, the consensus is clear: India's growth story remains among the most compelling globally. "With ongoing reforms, a stable macroeconomic framework, and rising consumer demand, India is poised to remain a standout performer among emerging markets," Jain added.

As both global agencies turn increasingly bullish on India, the message is unmistakable: Asia's third-largest economy is not just growing faster than its peers, but doing so with structural strength, sectoral depth, and reform-driven resilience.