IMF cuts global growth forecast for second time in 2026 amid West Asia tensions; where does India stand?
&imwidth=600&imheight=450&format=webp&quality=medium "IMF cuts global growth forecast for second time in 2026 amid West Asia tensions; where does India stand?")
Bombay Stock Exchange (BSE), Mumbai. Photograph: (AFP)
The IMF lowered its 2026 global growth forecast to 3.0 per cent in its latest World Economic Outlook update, after reducing it from 3.3 per cent to 3.1 per cent in April due to the US-Iran war.
The International Monetary Fund (IMF) on Wednesday lowered its global growth forecast for 2026 for the second time this year, warning that renewed fighting in West Asia has increased uncertainty over the world economy.
In its latest World Economic Outlook update, the IMF projected global economic growth at 3.0 per cent for 2026, down from the 3.1 per cent forecast it made in April.
The updated forecast was prepared before the latest exchange of fire between the United States and Iran.
This is the second time in 2026 that the IMF has lowered its global growth outlook. The Fund also expects the world economy to grow at a slower pace than in 2025. The IMF now expects global inflation to reach 4.7 per cent this year, higher than it had projected earlier.
The IMF expects global growth to improve to 3.4 per cent in 2027.
In April's forecast, the global fund has slashed its global GDP growth forecast to 3.1%, down from its previous 3.3% estimate.
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US and Israeli strikes targeting Iran since February 28 triggered retaliation from Tehran, which virtually blocked the Strait of Hormuz and pushed the Middle East into war. The disruption to traffic through the strategic waterway drove oil prices higher, adding pressure on economies around the world. Oil and gas shipments resumed after a temporary US-Iran agreement paused hostilities, but tensions have escalated after a recent exchange of fire between Washington and Tehran.
Also Read: Trump says US may reinstate naval blockade, attack Iran’s oil, electric and water infrastructure
India's growth outlook revised
The IMF also marginally lowered India's real GDP growth forecast for 2026 to 6.4 per cent, reducing it by 0.1 percentage point from its April estimate. It attributed the revision to a more challenging global environment shaped by geopolitical tensions and trade uncertainty.
At the same time, the Fund raised India's growth forecast for 2027 to 6.7 per cent from its earlier projection of 6.5 per cent, reflecting confidence in the country's medium-term outlook.
The IMF said India continues to be one of the fastest-growing major economies.
"India remains among the fastest-growing major economies, with growth projected at 6.4 per cent, supported by strong momentum in private consumption and services activity," the report said.
