The International Monetary Fund (IMF) stated on Thursday that Even if the Iran conflict and rising energy prices have an impact on the economy, India is still a significant engine of global economic growth. However, the IMF also warned that the country has not been immune to interruptions in the world’s energy markets.
At a regular IMF news briefing, Julie Kozack, Director of the IMF’s Communications Department, stated that India’s economy has remained resilient in spite of external headwinds, bolstered by strong internal demand.
Kozack said that despite the war’s effects and external global headwinds, India’s economy has been expanding quickly and has been helped by very strong domestic demand.
The IMF stated that it still predicts India’s economy to grow by 6. 5 percent in fiscal year 2026-27, maintaining the upward revision made in April.
We had forecast a growth of 6. 5% for fiscal year 2026–27, which was a little bit of an improvement from what we had in January. Still fairly strong growth, according to Kozack, is the 6. 5 percent increase.
According to her, the prediction took into account the significant momentum from last year and the drop in US tariff rates, which lessened the blow of the worldwide energy crisis.
She added that the decrease in the US tariff rate—which had been set at 50% and then reduced to 10%—also contributes to the reduction in tariffs, which also partially countered the effects of the global energy crisis on India.
During the first three months of the year, Kozack stated that India’s economy had exceeded expectations.
Currently, we observe that the momentum has maintained throughout the first quarter of this calendar year. According to her, India’s economy grew by 7. 8% during the first quarter, which was more than we had forecast for April.
There is still considerable momentum in India. Therefore, even after the shock, it still serves as a global economic growth engine.
When asked if the disturbances around the Strait of Hormuz and the Middle East conflict might damage India’s energy-reliant economy, Kozack said that the country had unavoidable suffered the effects of increasing international energy prices.
The energy shock has had an impact worldwide, and no nation has truly been unaffected by the global shock, she stated, adding that “I think it’s obvious. ”
We did observe India dealing with energy supply problems. Like most countries in the world, India was impacted by rising prices as a result of the energy price shock, and because India imports a lot of energy, we saw the consequences, according to Kozack.
At the same briefing, Kozack stated that the IMF saw the latest truce in the Middle East and progress toward reopening the Strait of Hormuz as positive steps for the world economy. She mentioned that while some other commodity prices had started to fall, oil prices had fallen from their top but were still around 10% more expensive than before the war.
On July 8, the IMF is scheduled to release revised worldwide economic forecasts.