Saturday 24 / October / 2026
India’s economic resilience remains robust amid global uncertainty, supported by strong domestic demand, infrastructure investment, services-sector expansion and manufacturing growth, according to the International Monetary Fund’s (IMF) October 2026 outlook.
The IMF has raised India’s growth forecast to 7 per cent for both 2026 and 2027, reinforcing the country’s position as the fastest-growing major economy amid geopolitical tensions, volatile energy markets and trade-policy uncertainty.
India’s growth momentum is underpinned by household consumption, private investment, public infrastructure spending and technological modernisation. Expanding digital services, manufacturing capabilities and export markets are also strengthening the economy’s competitiveness and resilience to external shocks.
India’s large domestic market remains a key source of economic stability, with household consumption, business investment and public expenditure supporting activity across sectors such as automobiles, housing, tourism, healthcare and financial services.
The services sector continues to play a central role, particularly in information technology, business services, telecommunications, finance, transport and tourism. Emerging areas such as artificial intelligence, cloud computing, cybersecurity, data analytics and digital finance are expected to support productivity, exports and high-value employment.
The expansion of digital payments, e-commerce and digital public infrastructure has also improved market access, reduced transaction costs and enabled small businesses to reach customers beyond their local markets.
Infrastructure and manufacturing strengthen competitiveness
Investment in transport, logistics, power and digital connectivity is helping reduce business costs, improve supply-chain efficiency and attract private investment. Initiatives such as the PM Gati Shakti National Master Plan and the National Logistics Policy aim to improve multimodal connectivity and strengthen the country’s logistics network.
Manufacturing is another important driver of growth, with opportunities in electronics, pharmaceuticals, engineering goods, automotive components, solar modules and green hydrogen infrastructure.
India’s manufacturing sector grew by 9.2 per cent in the first quarter of the 2026-27 financial year, while the Purchasing Managers’ Index (PMI) rebounded to 55.1 in September, its highest level in seven months, according to the figures cited in the outlook.
Exports also recorded strong momentum, increasing by 14 per cent between April and September 2026. India aims to raise total exports to $1 trillion in 2026-27 and $2 trillion by 2030, supported by market diversification and deeper integration into global value chains.
Energy security and external risks
As a major crude oil importer, India remains vulnerable to rising international energy prices, which can increase import costs, widen the current account deficit and fuel domestic inflation.
Diversifying energy sources and suppliers, strengthening domestic production, improving energy efficiency and expanding renewable energy infrastructure remain important to reducing these vulnerabilities.
India’s export earnings, services trade and remittance inflows also provide support against external pressures, while fiscal discipline and macroeconomic management help sustain investor confidence.
Global outlook remains challenging
The IMF forecasts global economic growth to slow from 3.5 per cent in 2025 to 3.1 per cent in 2026 before recovering to 3.4 per cent in 2027. Headline inflation is projected to rise to 4.7 per cent in 2026 before easing to 4.1 per cent.
The outlook identifies the Middle East conflict, higher oil prices and uncertainty over trade policies as key pressures on global activity, partly offset by investment linked to artificial intelligence.
The baseline projection assumes the Strait of Hormuz reopens in March 2027. A prolonged disruption to shipping through the strategic waterway is identified as a major downside risk, alongside elevated public debt, rising borrowing costs and a possible pullback in AI investment.
Faster productivity gains from artificial intelligence could, however, provide an upside to the global outlook.
India’s ability to sustain growth will depend on continued reforms, stronger private investment, export diversification, manufacturing competitiveness and energy security. Maintaining fiscal stability while expanding infrastructure and developing high-value industries will also be important to ensuring that economic gains translate into broader employment and inclusive growth.
With strong domestic fundamentals and an expanding role in global trade and services, India is positioned to remain a major contributor to global economic growth despite persistent external uncertainties.
