India's GDP Expected to Increase by 6.2% Despite Tariff Challenges: IMF
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Synopsis
The IMF has downgraded the global economic growth forecast to 2.8% for 2025 due to trade tensions and tariff uncertainties. However, it predicts India's GDP will grow at a stable rate of 6.2% amidst these challenges, supported by strong private consumption, especially in rural areas.
Key Takeaways
- The IMF projects India's GDP growth at 6.2% for 2025.
- Global economic growth forecast reduced to 2.8%.
- Trade tensions stemming from US tariffs impact global growth.
- China's growth forecast lowered to 4.0% for 2025.
- Private consumption supports India's economic stability.
New Delhi, April 22 (NationPress) The International Monetary Fund (IMF) has revised the global economic growth prediction downward by 0.5 percent, citing trade conflicts and uncertainties arising from Trump-era tariffs. Nevertheless, the IMF anticipates that India's GDP growth will stay above 6 percent, despite the challenges.
The IMF unveiled its April 2025 World Economic Outlook (WEO) report in Washington on Tuesday.
The report noted that shortly after the January 2025 WEO Update, the United States implemented several rounds of tariffs affecting major trading allies and key industries.
“Consequently, we predict that the dramatic surge in both tariffs and uncertainty witnessed on April 2 will result in a notable deceleration in global growth in the immediate future,” the report stated, projecting global growth to decline to 2.8 percent in 2025 and 3 percent in 2026, a decrease from the 3.3 percent forecasted in its January update.
The outlook indicates that the Indian economy is set to grow by 6.2 percent in 2025 and 6.3 percent in 2026.
Previously, in January 2025, before the tariffs impacted the forecast, the IMF had estimated a 6.5 percent growth for both years.
“For India, the growth forecast remains relatively stable at 6.2 percent in 2025, bolstered by private consumption, especially in rural regions,” the report indicated.
In comparison, China’s growth estimation has been reduced to 4.0 percent for 2025 and 4.6 percent for the following year, while the United States is predicted to experience a more significant downturn, with a 1.8 percent GDP growth forecast for this year, followed by 1.7 percent in 2026.
The Reserve Bank of India, in its recent bi-monthly policy statement, projected a 6.5 percent GDP growth for FY26, a decrease of 20 basis points primarily due to global uncertainties stemming from the heightened tariffs imposed by the US.
The IMF has also forecasted a mere 1.7 percent growth in global trade, which is down by 1.5 percent from its January 2025 estimate.
“This forecast reflects the increased tariff barriers impacting trade flows and, to a lesser extent, the diminishing effects of cyclical factors that have supported the recent uptick in goods trade.”
