IMF's World Economic Outlook: India may fare better than the world but that’s no reason to celebrate

Subscribe to enjoy similar stories.The International Monetary Fund’s (IMF) latest projections for the global economy are broadly along expected lines, but its view on India springs a surprise. The multilateral lender now sees India’s growth exceeding what it had forecast before the outbreak of war in West Asia. At 6.5%, India’s projected GDP growth for 2026-27 is 0.1 percentage point higher than published in the January World Economic Outlook of the IMF and 0.3 percentage point higher than its October view.

Even though modest, this upshift underscores an economic momentum reckoned to be less exposed to war shocks than the world’s pace of expansion. The global economy is seen growing 3.1% in 2026, down from 3.3% predicted in January. “We were planning to upgrade growth for 2026 to 3.4%” before the war intervened, IMF chief economist Pierre-Olivier Gourinchas reportedly said.

Clearly, the war has upset the IMF’s calculations. If that markdown does not look drastic, it is because its view assumes a short-lived conflict. If hostilities persist, global growth could dip to 2.5%, possibly even to 2% in the event of prolonged energy disruptions.

That would feel recessionary. Together with a surge in inflation to 6%, it would spell stagflation. For now, global inflation in 2026 is placed at 4.4%, up from 3.8% projected earlier.

As the world faces a range of risks, economies could be hit by the war through a maze of effects. Three channels are the least escapable. First, as a supply shock sets in, energy-intensive goods and services—fertilizers, chemicals, food, transport, heating, etc—will get dearer.