IMF raises India’s growth projection despite Trump’s tariffs

Washington, Oct 14 The International Monetary Fund has raised India’s growth projection to 6.6 per cent, an upward trend of 0.2 percentage points, in its latest Global Economic Outlook report.

The IMF, in its report released in Washington on Tuesday, said that India’s strong growth in the first quarter of 2025 is “offsetting” the US tariff increase on its imports to the country.

“In India, growth is projected to be 6.6 per cent in 2025…Compared with the July WEO update, this is an upward revision for 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,” the report said.

However, it projects a slight downward projection for 2026, a growth rate of 6.2 per cent, a 0.2 percentage point lower than its earlier projection.

The Indian economy grew at a faster rate of 7.8 per cent in its April-July quarter, beating all expectations.

On Monday, the IMF Managing Director Kristalina Georgieva called India’s growth journey "impressive," and lauded the government for policy and tax 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,” she added.

Last week, the World Bank also raised its growth projection for India for 2025 from 6.3 per cent to 6.5.

As India is expected to continue its growth run, the IMF predicted that the global economy is expected to grow at a modest 3.2 per cent this year.

The IMF believed that Trump’s tariff shocks are smaller “than initially feared.”

“With many trade deals and exemptions, most countries also refrained from retaliation, keeping the trading system open, and the private sector proved agile, front-loading imports and rerouting supply chains,” said IMF Chief Economist Pierre Olivier Gourinchas on Tuesday.

However, he warned that the “tariff shock is here” and is further dimming already weak growth prospects, including in the United States.

“Even in the US, growth is revised down from last year. The labour market is weakening and inflation has been revised up and is persistently above target, signs that the economy has been hit by a negative supply shock,” he added.

The IMF has marginally revised its growth projection for the US economy, from 1.9 per cent to 2 per cent in 2025.

--IANS

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