The International Monetary Fund (IMF) has projected that the Indian economy will grow 6.6% in 2025, maintaining its position as one of the world’s fastest-growing major economies.
The latest World Economic Outlook (WEO) report suggests that India’s domestic strength continues to offset the impact of rising US tariffs and global trade tensions.
India’s Growth Outlook
According to the IMF, the 6.6% forecast reflects strong performance in the first quarter of 2025, which helped neutralise much of the tariff-related impact on exports. However, the figure is 0.2 percentage points lower than the pre-tariff projection made in October 2024.
India’s economic expansion is expected to outpace China’s 4.8% growth, cementing its role as the primary driver of Asia’s economic momentum.
The Fund also trimmed its 2026 projection for India to 6.2%, citing a possible easing of early-year momentum and global headwinds.
“Despite trade barriers, India’s growth fundamentals—domestic consumption, digital adoption, and investment—remain strong,” the IMF noted in its report.
Government and Domestic Estimates
India recorded a 6.5% real GDP growth in 2024-25. Despite global uncertainty, the government has maintained its 2025-26 GDP forecast at 6.3–6.8%, showing confidence in the resilience of domestic demand and infrastructure spending, ANI reported.
Economists expect private investment and services exports to remain robust, although manufacturing may feel short-term pressure from tariffs and shifting global supply chains.
Global Growth Forecast: 3.2% in 2025
The IMF expects global growth to reach 3.2% in 2025, slightly down to 3.1% in 2026. While the impact of US tariffs has been milder than anticipated, the Fund warns that “prolonged uncertainty and rising protectionism” could weigh on the global recovery.
Key projections:
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Advanced economies: Average growth of 1.6%
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Emerging markets: Growth of 4.2%
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United States: 1.9% ( down from 2.4% in 2024 )
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Spain: Fastest-growing advanced economy at 2.9%
The IMF added that inflation is likely to decline globally, though it remains above target levels in several economies, including the US.
IMF on Policy Challenges
In its outlook, the IMF stressed that the global economy is “adjusting to a landscape reshaped by new policy measures.” While recent trade negotiations have softened some tariff extremes, volatility persists. Temporary factors that boosted activity in early 2025—such as front-loading of orders—are expected to fade in the coming quarters.
The Fund cautioned that fiscal vulnerabilities, financial market corrections, and institutional weaknesses could threaten long-term stability.
“Fiscal buffers should be rebuilt. Central bank independence must be preserved. Structural reforms should be accelerated,” the IMF said, urging nations to strengthen policy credibility and trade diplomacy.
