Gopinath: IMF may raise India’s growth forecast closer to 7%

New Delhi: The International Monetary Fund (IMF) is likely to raise India’s GDP growth forecast for the current fiscal year closer to 7%, former IMF deputy managing director Gita Gopinath said on Wednesday.

“This Oct, IMF revised up India’s growth for 2025 to 6.6%. But that came in before the second quarter growth numbers came out. I expect they will move up to 7% the next time they come up with their numbers. India is actually doing better than was predicted before the crisis,” said Gopinath, now a professor of economics at Harvard University.

Several multilateral agencies, brokerages and economists have revised India’s GDP growth projections for 2025-26 after the 8.2% growth in the July-Sept quarter. She said the world has shown a lot of resilience since the tariffs were announced.

“Different parts of the world for different reasons. I believe artificial intelligence has been a big offset for tariffs around the world. The spending on it has supported growth everywhere,” she said. “I don’t think the lesson to take away is that high levels of tariffs are not a problem for the world. They are consequential. And I would say that the next couple of years we will continue to see some of the drag from this geoeconomic environment that we’re in,” said Gopinath.

She said at least from the US perspective, “we are past peak tariffs” in the US for several reasons. “The important piece is that 2026 is a year of midterm elections in the US. I don’t think there’s anybody who wants to have a lot of uncertainty in the run up to the elections,” said Gopinath.

She said tariffs have raised prices in the US & they’ve pushed up inflation by about 0.7 percentage points and the cost of living increase is a problem for affordability. “So that also dampens the incentive to raise tariffs further. There were important legal challenges to the tariffs in the US, which I think will also scale it down. So, from the US tariff perspective, I suspect we are, if not past the peak, but definitely close to the peak.”