‘Global economy in flux, prospects remain dim, prices rising in US’

International Monetary Fund (IMF) on Tuesday revised upwards India’s GDP growth forecast for the current fiscal to 6.6% compared to its earlier estimate of 6.4% on the back of strong growth, offsetting the impact of US tariffs on Indian shipments.

“The year 2025 has been fluid and volatile, with much of the dynamics driven by a reordering of policy priorities in the US and the adaptation of policies in the other economies to new realities. 

 Trade news has dominated the headlines, and, along with them, perceived prospects for the global economy have fluctuated,” IMF said.  In its latest World Economic Outlook (WEO), the multilateral lending agency has lowered the growth forecast for India by 20 basis points to 6.2% for 2026-27.

“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, and a downward revision for 2026,” the report said. 

The Indian economy grew by 7.8% in April-June--the highest in five quarters-- before the disruptive US tariffs were imposed. Earlier this month, the World Bank had  raised India's growth forecast for the current fiscal to 6.5 per cent from 6.3 per cent estimated earlier, saying the country is expected to remain the fastest-growing major economy. In July, the IMF revised its forecast for India's economic growth to 6.4% for both 2025 and 2026.  In its April 2025 report, it had projected the country's economic growth at 6.2% for 2025 and 6.3% for 2026. The IMF further said global growth is projected to slow from 3.3% in 2024 to 3.2% in 2025 and to 3.1%  in 2026. This is an improvement relative to the July WEO Update--but cumulatively 0.2 percentage point below forecasts made before the policy shifts in the October 2024 WEO, with the slowdown reflecting headwinds from uncertainty and protectionism, even though the tariff shock is smaller than originally announced. For emerging market and developing economies, the IMF said the growth is projected to moderate from 4.3% in 2024 to 4.2%  in 2025 and 4% in 2026. 

India emerging as key engine of global growth: IMF Chief

India is turning into a key engine of world growth, according to International Monetary Fund Managing Director Kristalina Georgieva, who spoke ahead of the 2025 IMF-World Bank Annual Meetings. 

“Global growth is forecast at roughly 3% over the medium term-down from 3.7% pre-pandemic. Global growth patterns have been changing over the years, notably with China decelerating steadily while India develops into a key growth engine,” the IMF Chief.