IMF projects India to outpace major economies as Middle East war drags global growth

India is set to be a rare bright spot in a darkening global outlook, with the International Monetary Fund projecting economic growth of 7.6% in 2025 and 6.5% in 2026 even as a war in the Middle East lifts oil prices and disrupts supply chains. In its latest World Economic Outlook, the IMF said global growth has been “thrown off course” by the US-Israel-Iran War, which started on February 28.

The fund expects world output to slow to about 3.1% in 2026, lower than earlier estimates, as higher energy costs ripple through economies. It projects global inflation to increase to 4.4% in 2026 before easing to 3.7% in 2027. If the war continues — or worse, exacerbates — the IMF warns growth could fall further to 2.5% or even close to 2%, with inflation rising to as high as 5.4%.

Against that backdrop, the IMF expects India’s momentum to hold. After expanding 7.6% in 2025, India is expected to grow 6.5% in 2026, with the pace likely to continue over the next two years, according to the fund. By these projections, India is growing almost two to three times faster than most developed economies.

China’s growth, the IMF says, will slow from 5% in 2025 to around 4.4% in 2026, and further to 4% after that. The United States is seen growing at about 2.1% in 2025 and 2.3% in 2026. Major advanced economies in Europe and Asia are expected to expand more slowly, with Germany and Japan close to 1% or even lower, and the United Kingdom near the 1–1.5% range.

The IMF’s projections highlight a widening divergence: India maintaining relatively strong expansion while the global economy faces pressure from higher energy prices and supply chain disruptions tied to the conflict. The outlook, the fund cautions, will hinge on how long the war persists and whether it intensifies.