Winning Bizness Desk

Mumbai. Following the International Monetary Fund (IMF), the World Bank has also slashed India's economic growth forecast for the financial year 2025-26. In its latest projection, the World Bank expects India’s GDP to grow at 6.3% in FY26, down from the earlier estimate of 6.7% made in October 2024. The bank cited global trade policy shifts and export slowdown as key pressures affecting the Indian economy’s growth momentum.

Global Headwinds to Impact Private Investment

The World Bank warned that global economic uncertainty and changing trade dynamics could weaken the positive impact of monetary policy on private investment in India. It said that policy unpredictability and slowing global demand are likely to suppress India’s export potential and may delay private sector investment recovery. The new forecast reflects a cautious stance amid external volatility and geopolitical uncertainties.

IMF and RBI Also Lower Growth Estimates

Just a day before the World Bank update, the IMF revised India’s FY26 GDP growth forecast to 6.2%, a downgrade from its previous estimate of 6.5%. The Reserve Bank of India (RBI) had also lowered its growth projection in its April 9 Monetary Policy meeting. The RBI now expects the Indian economy to expand at 6.5% in FY26, down from its earlier forecast of 6.7%.

Moody’s Predicts Slower Growth Due to Tariffs

On April 16, global ratings agency Moody’s also reduced its calendar year 2025 growth forecast for India to a range of 5.5%–6.5%, from the previous projection of 6.6%. Moody’s cited the impact of new tariff policies expected under former US President Donald Trump’s administration. The firm noted that higher tariffs on diamonds, textiles, and medical equipment could hurt Indian exports and widen the trade deficit with the US. While a 90-day delay in implementing tariffs may offer temporary relief, full-scale imposition could dent export demand and lower business confidence.

Q3 FY25 GDP Growth Slows to 6.2%

According to data released by the National Statistical Office (NSO) on February 28, India’s GDP grew at 6.2% in the October–December quarter (Q3) of FY24-25. This marks a significant decline from the 8.4% growth in the same quarter a year ago. The estimated GDP growth for the full financial year 2024-25 now stands at 6.5%, revised slightly upward from the 6.4% projected in January. However, this remains the lowest growth rate in the past four years, down from the 8.2% growth recorded in FY23-24.

Key Summary Points:

1. World Bank revised India’s FY26 GDP growth forecast from 6.7% to 6.3%.

2. The downgrade follows similar cuts by the IMF and RBI earlier this April.

3. Global trade disruptions and policy uncertainty are cited as key concerns.

4. IMF now expects 6.2% growth for India in FY26, down from 6.5%.

5. Moody’s cut 2025 growth outlook to 5.5–6.5% due to US tariff risks.

6. India’s Q3 FY25 GDP growth slowed to 6.2% from 8.4% a year ago.

7. FY24-25 GDP is expected to grow at 6.5%, still strong but slower than last year.