India to remain fastest-growing major economy in FY27 despite global slowdown: IMF

India is expected to retain its position as one of the world's fastest-growing major economies in FY27, with the International Monetary Fund (IMF) projecting 6.4 per cent GDP growth despite a broader slowdown in global economic activity. The outlook is supported by resilient private consumption and sustained momentum in the services sector.

The IMF attributed India's strong growth outlook to robust private consumption and continued strength in services activity, allowing the country to maintain its lead even as global growth weakens.

Globally, economic growth is projected to slow to 3.0 per cent in 2026 before recovering to 3.4 per cent in 2027. World trade volume growth is also expected to moderate sharply, easing from 5.0 per cent in 2025 to 3.5 per cent in 2026 before improving to 4.3 per cent in 2027.

According to the IMF, the slowdown reflects the impact of earlier front-loading in trade, the drag from tariffs, and the gradual realignment of global supply chains through trade diversion and rerouting.

Growth across emerging market and developing economies is projected to slow to 3.8 per cent in 2026 before recovering to 4.5 per cent in 2027.

Global economies face mixed growth outlook

China's economy is projected to grow 4.6 per cent in 2026, weighed down by higher oil prices and structural challenges. In contrast, Vietnam's growth forecast has been revised upward to 7.5 per cent, while Malaysia is expected to expand by 4.7 per cent, supported by the global technology cycle.

"In the United States, growth is projected at 2.3 per cent in 2026 and 2.2 per cent in 2027, virtually unchanged from April," the IMF report stated.

"Activity is supported by fiscal policy, accommodative financial conditions, and continued technology-related business investment and productivity strength, with only limited impact from the war given the country's net energy exporter status," the report added.

The euro area's growth is projected at 0.9 per cent in 2026, 0.2 percentage points lower than the April forecast, due to weaker first-quarter momentum, elevated energy prices and subdued consumer confidence.

The United Kingdom's economy is expected to grow by 1.0 per cent in 2026, while Japan's growth is projected at 0.6 per cent. South Korea is forecast to expand by 2.6 per cent, driven by sustained semiconductor demand.

In the Middle East and Central Asia, growth is expected to fall sharply to 0.7 per cent in 2026 before rebounding to 6.5 per cent in 2027 following a prolonged closure of the Strait of Hormuz.

Commodity-exporting economies including Iraq, Kuwait and Qatar are expected to contract in 2026, while Saudi Arabia is projected to grow 1.7 per cent. Iran's growth forecast has been revised upward to -5.4 per cent.

Inflation to remain elevated before easing

The IMF also warned that global inflation is likely to pause its downward trend.

"Global inflation is expected to pause its steady decline," the report said.

"Headline inflation is projected to rise from 4.1 per cent in 2025 to 4.7 per cent in 2026 before easing to 3.9 per cent in 2027, with the increase for 2026 driven mainly by higher energy and food prices," it noted.

The report added that core inflation is expected to ease only gradually. Inflation targets are projected to be achieved by mid-2027 in the United Kingdom, by the end of 2027 in the United States and Japan, and only in 2028 in the euro area. Inflation in China is also expected to rise from current low levels.

(With inputs from ANI)