Washington: India continues to be a major driver of global economic growth despite the economic impact of the Iran conflict and higher energy prices, the International Monetary Fund (IMF) said on Thursday, while cautioning that the country has not been immune to disruptions in global energy markets.
Addressing a regular IMF press briefing, Julie Kozack, Director of the IMF’s Communications Department, said India’s economy had remained resilient despite external headwinds, supported by robust domestic demand.
“What I can say is that despite the impact of the war and global headwinds from the global economy, or externally, India’s economy has been growing robustly, and it has been supported, particularly by very strong domestic demand within India,” Kozack said.
The IMF said it continues to project India’s economy to grow by 6.5 per cent in fiscal year 2026-27, maintaining the upward revision made in April.
“We had projected growth at 6.5 per cent in fiscal year 26-27, and that was a slight upgrade compared to what we had had in January. So, 6.5 per cent is still quite strong growth,” Kozack said.
She said the forecast reflected strong momentum carried over from last year and the reduction in US tariff rates, which helped cushion the impact of the global energy shock.
“It also reflects the reduction in the US tariff rate, which had been set at 50 per cent and then was reduced to 10 per cent, and that reduction in tariffs also partly offset the impact of the global energy shock on India,” she said.
Kozack said India’s economy had continued to outperform expectations during the first quarter of the calendar year.
“Right now, we see that there’s strong momentum that has continued in the first quarter of this calendar year. The economy in India had been growing in the first quarter at 7.8 per cent, and that was above what we had built into our projection for April for the first quarter,” she said.
“So, there is quite strong momentum still in India. So, it does still remain a growth engine for the global economy, despite the shock.”
Asked whether the conflict in the Middle East and disruptions around the Strait of Hormuz could hurt India’s energy-dependent economy, Kozack said the country had inevitably felt the impact of higher global energy prices.
“I think it’s clear that the energy shock has had an impact globally and no country has really been untouched by the global shock,” she said.
“We did see that India did face supply disruptions with respect to energy. India was also affected by higher prices, like most countries in the world, because of the energy price shock, and of course, because India imports quite a lot of energy, we saw then, of course, the effect,” Kozack added.
During the same briefing, Kozack said the IMF viewed the recent ceasefire in the Middle East and progress towards reopening the Strait of Hormuz as positive developments for the global economy. She noted that oil prices had retreated from their peak but remained around 10 per cent above pre-war levels, while some other commodity prices had also begun to ease. The IMF is expected to provide updated global economic projections on July 8.
(IANS)
