IMF forecasts India’s GDP growth to 6.6% for 2025 despite US tariff concerns

The International Monetary Fund (IMF) on Tuesday (October 14) revised its GDP growth forecast for India, increasing the projection for 2025 to 6.6%, up from the earlier estimate of 6.4%. However, the organisation has slightly downgraded the 2026 growth outlook to 6.2%. The adjustment for 2025 stems from a strong performance in the first quarter, which offset the negative impact of the higher US tariff on Indian imports since July. Compared to the forecast made prior to the US tariff increase, the revised projections reflect a cumulative 0.2% reduction.

For the global economy, the IMF has lowered its growth expectations for 2024 and 2025. It now anticipates a global growth rate of 3.2% for this year, followed by 3.1% in 2025, marking a 0.2% downgrade since its previous projections. The IMF warned that it’s too soon to determine if the recent surge in US tariffs has had no lasting effect on global growth. In its assessment, the IMF highlighted that advanced economies, including the US, are expected to grow at a sluggish pace of 1.5% in 2025-2026, while emerging markets like India will continue to show stronger growth, albeit at a slightly slower rate of around 4%.

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IMF Managing Director Kristalina Georgieva expressed strong optimism about India’s economic trajectory, emphasizing the country's bold reforms. She praised India’s success in large-scale digital identity implementation and reforms in sectors such as taxation and digital payments, including the recent changes to the Goods and Services Tax (GST) system. According to Georgieva, these structural changes have reinforced India’s economic stability, and the country’s adaptability has allowed it to thrive despite challenges such as the tariff increases from the US.

The IMF’s projections suggest that India, the world’s fastest-growing major economy, is on track to surpass Japan and become the fourth-largest economy by nominal GDP. In the long term, India is expected to overtake Germany and rise to third place globally, following the US and China. Despite challenges like the US’s tariff hikes, economists are confident that India's economic growth will remain resilient due to strong domestic fundamentals, particularly its robust corporate sector and favorable financial conditions.