Daijiworld Media Network - Washington
Washington, Oct 14: The International Monetary Fund (IMF) has revised India’s economic growth forecast upward to 6.6% for 2025, citing strong first-quarter performance that has more than compensated for the recent increase in US tariffs on Indian imports.
In its latest World Economic Outlook released Tuesday in Washington, the IMF said:
“In India, growth is projected to be 6.6 per cent in 2025…with carryover from a strong first quarter more than offsetting the increase in the US effective tariff rate on imports from India since July.”
This marks a 0.2 percentage point increase from its earlier projection in July.
India's economy grew by 7.8% in the April–July quarter of 2025, exceeding forecasts and reinforcing the country’s reputation as a global growth engine. However, the IMF revised India’s 2026 projection downward slightly to 6.2%, reflecting potential moderation in momentum.
Praise from IMF Leadership
IMF Managing Director Kristalina Georgieva praised India’s economic trajectory, calling it “impressive” and highlighting the country’s success in implementing structural reforms.
“I'm very big on India because of the boldness with which they do things that others are telling them…not possible. For example, digital identity. Everybody was saying you cannot have everybody with a digital ID…they have proven them wrong,” Georgieva said on Monday.
India’s push for digital infrastructure, tax reforms, and sustained focus on manufacturing and exports has drawn global attention, with the World Bank also revising India’s 2025 growth forecast upward from 6.3% to 6.5% earlier this month.
Global Economy Slows, India Outperforms
While India remains a bright spot, the IMF estimates global GDP growth at 3.2% for 2025, reflecting economic headwinds in advanced economies and geopolitical uncertainties.
IMF Chief Economist Pierre-Olivier Gourinchas acknowledged that recent tariff hikes by the US — particularly under Executive Order 14324 — are acting as a “negative supply shock,” particularly for the US itself.
“Even in the US, growth is revised down… The labour market is weakening, and inflation remains persistently above target,” he said.
Despite tariff tensions, the IMF notes that many economies adapted well through trade deals, supply chain shifts, and proactive import strategies.
US Growth Tapers Slightly
The US growth forecast has been marginally increased to 2% in 2025, up from 1.9%, but outlook remains cautious due to inflationary pressures and weakening labour indicators.
In contrast, India’s economic fundamentals — supported by domestic demand, investment inflows, and a resilient services sector — continue to position it as a leader among emerging markets.
As global uncertainties linger, the IMF's upward revision reinforces India’s status as one of the few major economies driving global growth into the next year.