India’s economic outlook remains resilient despite the turbulence caused by the ongoing Middle East conflict, according to the International Monetary Fund’s Chief Economist Pierre-Olivier Gourinchas.

He emphasised that India has performed strongly in 2025, with growth estimated at 7.6 per cent on a fiscal year basis.

This momentum is expected to continue into 2026, with the IMF projecting growth of 6.5 per cent, a very slight upgrade from earlier estimates.

The revised forecast comes even as global energy prices rise due to the conflict, creating challenges for oil-dependent economies such as India. Gourinchas acknowledged that the war is exerting downward pressure, but stressed that the strong momentum from 2025 more than offsets these headwinds.

He also highlighted easing trade tensions between India and the United States as a supportive factor, noting that tariff discussions have reduced uncertainty and lowered tariff levels.

Inflationary pressures, however, are expected to intensify in India in the coming year. The IMF projects inflation to rise to 4.7 per cent in 2026, driven partly by higher global energy costs and increasing food prices. Gourinchas pointed out that food prices have already begun to pick up in early 2026, adding to the inflationary burden.

While near-term prospects remain stable, Gourinchas cautioned that India’s structural dependence on energy imports poses a vulnerability in a volatile global environment. He underlined that India is highly energy dependent, particularly on oil, which could create headwinds in the future. Nonetheless, he observed that India’s current growth trajectory is broadly aligned with its long-term potential, which the IMF estimates at around 6.5 per cent.

The IMF’s assessment underscores India’s role as a key driver of global growth at a time when many economies are struggling with slowing expansion and heightened uncertainty. The escalation of conflict in the Middle East has disrupted energy flows and contributed to higher oil and commodity prices, with the IMF warning that the duration and intensity of the shock will determine its broader impact on the world economy.

Despite these challenges, India has sustained strong domestic demand and investment momentum in recent years, supported by policy stability and a resilient private sector.

IANS