Finshots Daily Can India really grow at 6.6% like the IMF says?
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Oct 22, 2025 The IMF has raised India's growth forecast for FY26 to 6.6%, sparking a debate on its accuracy. The host explores how India's impressive 7.8% growth in Q1 FY26 influenced this upgrade despite export challenges. Historical accuracy of IMF forecasts is questioned, revealing past errors during crises. Delving into why the IMF tends to be optimistic, the discussion highlights biases related to debt and policy assumptions. Insights on India's statistical reliability and favorable reforms position the country uniquely in the eyes of the IMF.
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IMF's Upgrade Follows Strong Q1 Momentum
- IMF upgraded India's FY26 growth to 6.6% after a strong Q1 print of 7.8%.
- The upgrade came despite steep US tariffs because momentum can cushion export shocks.
Forecasts Look Good—Until Crises Hit
- IMF forecasts are often accurate within 1% in stable times but falter around crises.
- The fund tends to be optimistic, with a small bias that compounds to about 1% over five years.
Financial Stress And Credit Gaps Skew Forecasts
- The IMF underestimates financial stress and credit gaps when forecasting recoveries.
- This causes overoptimistic timing and magnitude of growth rebounds after crises.