IMF Raises India’s Growth Forecast to 6.4% in 2025

IMF Raises India’s Growth Forecast to 6.4%

Why in the News ?

The International Monetary Fund (IMF) has revised India’s GDP growth forecast for FY2025-26 and FY2026-27 to 6.4%, citing easing global trade tensions, improved financial conditions, and a more benign external environment compared to earlier projections.

IMF Projections and Growth Outlook:

• India’s GDP growth is projected at 6.4% for both FY26 and FY27, up from 6.2% and 6.3%, respectively.
  
• The global economy is expected to grow at 3.0% in 2025 and 3.1% in 2026, revised up from earlier predictions.
  
• China’s growth received the biggest upgrade—from 4% to 4.8% in 2025.
  
• Other countries with improved outlooks include the US, Canada, Brazil, and Nigeria.
  
• The RBI also expects India’s GDP to grow by 6.5% in FY25 and 6.7% in FY27.

Trade Tensions and Policy Concerns

• Despite easing, tariffs remain historically high; US consumers face an average 18.2% tariff, down from 28% in April.
  
• The IMF cited the “unprecedented escalation” in trade tensions during April as a reason for earlier downward revisions.
  
• Global trade share is projected to decline from 57% (2024) to 53% (2030).
  
• IMF Chief Economist Pierre-Olivier Gourinchas warned of continued global uncertainty and downside risks.
  
• IMF downgraded 2024 global growth by 0.2 percentage points, remaining below pre-COVID averages.