The International Monetary Fund (IMF) on Monday raised India’s growth outlook for 2025 to 7.3%, led by better corporate earnings in the third quarter and strong momentum heading into the fourth quarter. However, growth may slow down to 6.4% in the following two fiscal years as cyclical factors fade, the IMF in its World Economic Outlook said. 

This is a positive development for the Indian economy after a period of stress last year. At that time, the slump in corporate earnings growth was the main reason for economic and stock market volatility. 

According to the international body, the global economy has largely absorbed the immediate impacts of tariff-related shocks. “Global economic growth continues to show notable resilience despite significant US-led trade disruptions and heightened uncertainty,” the IMF said in a blog on Monday. 

Indian economy growing faster than global average 

The IMF also estimates that India will grow by 6.4% in both 2026 and 2027, much faster than the global average. The world economy is expected to grow by 3.3% in 2025 and 2026, before slowing slightly to 3.2% in 2027. 

India’s growth outlook is stronger than that of other major economies. The US is projected to grow by 2.4% in 2026, China by 4.5%, and the Euro Area by just 1.3%. Among emerging Asian economies, India continues to lead and is a key driver of Asia’s expected 5.0% growth in 2026. The IMF said recent improvements in corporate earnings are giving the economy a needed boost and point to early signs of recovery. 

“Our latest projections indicate that global growth will hold steady at 3.3% this year, an upward revision of 0.2 percentage points compared to October estimates, with most of the improvement accounted for by the United States and China,” the IMF said. 

The IMF said global growth could increase by up to 0.3 percentage points in 2026. Over the medium term, growth could rise by 0.1 to 0.8 percentage points each year, depending on how quickly artificial intelligence is adopted and how prepared countries are to use AI. 

“While manufacturing activity remains subdued, IT investment as a share of US economic output has surged to the highest level since 2001, providing a major boost to overall business investment and activity,” it said.