Overview
- India’s upgrade reflects stronger-than-expected third-quarter data and continued fourth-quarter momentum, with growth seen easing to about 6.4% over the next two fiscal years.
- The Fund attributes resilience to a surge in AI-related capital spending on data centers, chips and power that has helped offset earlier tariff shocks and supported activity, especially in the United States.
- The U.S. is now projected to grow 2.4% in 2026, China 4.5%, the euro area 1.3%, and the UK remains at 1.3% for 2026 according to the latest World Economic Outlook update.
- Global headline inflation is forecast to decline to 3.8% in 2026 and 3.4% in 2027, creating some room for more accommodative monetary policy.
- Risks are tilted to the downside, including potential disappointment in AI-driven productivity, renewed trade flare-ups, geopolitical tensions and policy uncertainty around U.S. tariff decisions.