IMF forecasts India to grow 6.6% in 2025, cuts projection for next year , Pg15.

Key Highlights:

• IMF increased India’s 2025 GDP growth forecast by 20 basis points to 6.6%.
• 2026 projection reduced to 6.2%, indicating a moderation in momentum.
• Global growth expected to rise modestly by 3.2% in 2025, with 2026 unchanged at 3.1%.
• Upward revision for India attributed to a “strong first quarter” performance in 2025.
• India’s GDP in June-end 2025 touched a five-quarter high of 7.8%, led by manufacturing, services, and construction.
• The impact of U.S. tariff measures under President Trump was mitigated by India’s robust domestic demand.

Detailed Insights:

• Rationale for Growth Outlook:
  • IMF credited carry-over effects from robust Q1 growth and resilience in key sectors for India’s improved 2025 outlook.
  • Domestic reforms and industrial production growth continued to bolster economic activity.
• Challenges Ahead (2026):
  • Momentum expected to fade due to global protectionism, trade uncertainty, and weaker external demand.
  • The IMF cited slowing global manufacturing cycles and cautious private investment as key drags.
• Global Context:
  • The impact of the U.S. tariff regime was assessed as “smaller than anticipated”.
  • Despite trade disruptions, India’s domestic resilience “more than offset” external shocks.
  • The IMF urged economies to maintain open trade policies to avoid long-term productivity losses.

Scientific/Technical Concepts Involved:

• GDP Growth Rate: The percentage increase in the value of all goods and services produced in an economy over a period.
• Basis Points (bps): A unit of measure for interest rates and economic projections, where 1 bps = 0.01%.
• Protectionism: Economic policy of restricting imports through tariffs or quotas to protect domestic industries.