India remains among the fastest-growing major economies, with growth projected at 6.4% for fiscal year 2026-27, supported by strong momentum in private consumption and services activity, according to the International Monetary Fund's July 2026 World Economic Outlook Update.
Global Growth Outlook
The IMF report shows global growth is projected to slow to 3.0% in 2026 before recovering to 3.4% in 2027. World trade volume growth is expected to decelerate sharply from 5.0% in 2025 to 3.5% in 2026, then recover to 4.3% in 2027. These dynamics reflect earlier front-loading, tariff drag, and gradual adjustment of trade linkages and production chains through trade diversion and rerouting.
Emerging Market and Developing Economies
In emerging markets and developing economies, growth is projected to slow to 3.8% in 2026 before recovering to 4.5% in 2027. China's 2026 growth is projected to slow to 4.6% due to higher oil prices and structural headwinds. Vietnam's growth projection is revised upward to 7.5%, and Malaysia is projected to grow at 4.7%, benefiting from the global technology cycle.
United States and Euro Area
In the United States, growth is projected at 2.3% in 2026 and 2.2% in 2027, virtually unchanged from April. Activity is supported by fiscal policy, accommodative financial conditions, and continued technology-related business investment and productivity strength, with only limited impact from the war given the country's net energy exporter status. Growth in the euro area is projected at 0.9% in 2026, 0.2 percentage point lower than the April forecast, attributed to a negative carryover from the first quarter, higher energy prices, and weak consumer confidence.
United Kingdom, Japan, and Korea
In the United Kingdom, growth is projected to fall to 1.0% in 2026, while Japan is expected to slow to 0.6%. Korea's growth is expected to rise to 2.6%, buoyed by semiconductor demand.
Middle East and Central Asia
In the Middle East and Central Asia, growth is projected to drop sharply to 0.7% in 2026 before rebounding to 6.5% in 2027, following a longer closure of the Strait of Hormuz. Commodity producers like Iraq, Kuwait, and Qatar face sharp contractions in 2026, while Saudi Arabia is projected to grow at 1.7%. Iran's growth is revised upward to -5.4%.
Inflation Trends
Global inflation is expected to pause its steady decline. Headline inflation is projected to rise from 4.1% in 2025 to 4.7% in 2026 before easing to 3.9% in 2027, with the increase for 2026 driven mainly by higher energy and food prices. Core inflation is expected to return to targets only gradually. The IMF estimated that inflation targets will be met by mid-2027 in the United Kingdom, by the end of 2027 in Japan and the United States, and only in 2028 in the euro area. Inflation in China is expected to rise from low levels.
