IMF raises 2026 world growth forecast to 3.1%, keeps India as fastest-growing major economy at 7%

The International Monetary Fund has nudged up its forecast for the world economy this year while warning that the expansion is becoming more uneven. Releasing its World Economic Outlook on Tuesday, 13 October, during the IMF and World Bank meetings in Bangkok, the fund projected global growth of 3.1% in 2026, up from 3.0% in its July update, and 3.4% in 2027.

India stays in front

The IMF projects India's economy to grow 7% in 2026, keeping it the fastest-growing major economy. Business Standard reported that this is an upgrade from the IMF's earlier projection of 6.4%. The Associated Press noted that the figure is still lower than the 7.7% recorded last year.

China is forecast to grow 4.5% this year, in line with Beijing's official target and down from 5% in 2025. US growth is projected at 2.3% in both 2026 and 2027, while the euro area is expected to expand by about 1.1% this year.

On prices, the IMF projects global inflation at 4.7% in 2026, easing to 4.1% in 2027, driven largely by higher energy and food costs. Its forecasts assume oil prices average around $96 a barrel this year and that shipments through the Strait of Hormuz resume by March. The Middle East and Central Asia region is expected to contract this year before rebounding in 2027.

A narrower, riskier recovery

IMF research director Silvana Tenreyro said the outlook is "highly uneven". According to the report, 32 countries now account for 95% of global growth, compared with 54 countries in April. The United States and China account for more than three-quarters of demand for AI-related chips and equipment.

The fund listed several risks: high government debt and borrowing costs, rising bond yields, cyber threats to financial systems and a possible correction in AI-linked stocks. Managing Director Kristalina Georgieva described AI's effect on jobs as "a slow moving tsunami", with around 40% of jobs globally likely to be affected.

Why it matters for India

A strong growth projection supports India's case for investment, but the IMF's assumptions about oil prices and Gulf shipping matter greatly for an economy that imports most of its crude. Higher energy costs could feed into inflation and the government's fiscal plans if the Middle East conflict persists.