India to grow 7 pc in 2026, outpace major economies: IMF

India is set to remain one of the fastest-growing major economies in 2026, with the International Monetary Fund (IMF) projecting growth of 7% in its October 2026 World Economic Outlook.

The forecast places India well ahead of the US, China, the UK, Japan and the major European economies, even as the global economy faces mounting inflationary pressures and a narrowing capacity to withstand economic shocks.

The IMF's projections show the world economy growing by 3.1% in 2026, before accelerating to 3.4% in 2027. Emerging market and developing economies are projected to expand by 3.7% in 2026, while advanced economies are expected to grow by 2.1%. Against this backdrop, India's projected 7% expansion stands out as a major source of growth among the world's large economies.

The IMF's accompanying note says India's calendar-year growth projections are 7.4% for 2026 and 7% for 2027, an important distinction when comparing the country with economies whose figures follow the calendar year.

India leads major economies

China, India's closest comparator among major emerging economies, is projected to grow by 4.5% in 2026 and 4% in 2027. The broader emerging and developing Asia group is expected to expand by 5.1% in 2026, slowing to 4.9% in 2027. India's forecast is higher than both figures.

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Among advanced economies, the US is projected to grow by 2.3% in both 2026 and 2027. Germany's growth is forecast at 1.3% in 2026 and 1.1% in 2027, while France is expected to expand by just 0.4% in 2026 before improving to 0.7% in 2027. Italy is projected to grow by 0.8% in 2026 and 0.6% in 2027.

Spain is a stronger performer within Europe, with projected growth of 2.5% in 2026, although its expansion is expected to moderate to 1.8% in 2027. The UK is forecast to grow by 1.3% in 2026 and 1.2% in 2027. Japan's growth is projected at 0.7% in both years, while Canada's economy is expected to expand by 1.1% in 2026 and 1.7% in 2027.

The contrast is also visible across developing regions. Latin America and the Caribbean are projected to grow by 2.3% in 2026, with Brazil at 2.2% and Mexico at 1.5%. Sub-Saharan Africa is forecast to grow by 4.5%, while Nigeria's projected expansion is 4.2%. South Africa is expected to grow by 1%.

Global resilience faces a tougher test

The IMF's outlook, however, is not an unqualified endorsement of the global growth trajectory. The Fund warns that the resilience displayed by the world economy is becoming increasingly uneven, with countries benefiting from artificial intelligence-related investment and favourable terms of trade performing relatively better than many energy-importing and lower-income economies.

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Global inflation is expected to reach 4.7% in 2026, largely reflecting higher energy and food prices. For India, the IMF's global assessment highlights a risk environment in which energy costs and food-price pressures could complicate the broader economic outlook, even as the country's growth projection remains strong.

The Fund identifies persistent or escalating tensions in the Middle East as a key downside risk. Higher energy and food prices could add to inflation while weighing on economic growth. Renewed trade tensions and rising sovereign bond yields pose further threats to the outlook.

Artificial intelligence presents risks in both directions. Investment linked to AI has supported economic activity, but the IMF cautions that expectations could prove too optimistic, triggering financial market corrections. Faster-than-expected productivity gains from AI, on the other hand, could provide an additional boost to growth.

Policy choices become critical

The IMF also warns that the buffers that helped economies absorb recent shocks are shrinking. High debt levels and rising borrowing costs are limiting governments' ability to respond to new disruptions, making the restoration of fiscal space an urgent priority.

It recommends that any assistance for households facing higher food and energy costs should be temporary, targeted and designed to avoid distorting economic incentives. Monetary policy, meanwhile, should remain dependent on incoming data and tailored to each country's circumstances.

Over the longer term, the Fund identifies stronger energy security, improved readiness for AI-related opportunities, and the preservation of open trade and international cooperation as important priorities.

For India, the message is twofold: the 7% growth projection places it well ahead of most major economies, but the global environment remains vulnerable to energy shocks, inflation and financial market volatility. The IMF's assessment suggests that strong headline growth and rising external risks can coexist, making economic resilience and policy flexibility central to the outlook.