The good news for India in IMF’s outlook
India’s 6% plus growth prospects are a result of domestic tailwinds to growth
India will continue to be the world’s fastest-growing economy by a distance, according to the IMF’s latest World Economic Outlook (WEO). To be sure, the global economic turmoil that has followed Donald Trump’s trade war will mean that India’s GDP will likely grow at 6.2% in 2025-26 instead of 6.5%, which is what the IMF projected in January. In an environment where global GDP growth is likely to slow down by 0.5 percentage points to 2.8%, this is a credible achievement. As IMF notes, India’s 6% plus growth prospects are a result of domestic tailwinds to growth.
India’s performance notwithstanding, the world economy and the existing economic order are going through a period of great turbulence, IMF has warned. Its tone goes as far as to suggest that the existing order might be on the verge of a change and an asymmetry between those who have gained and lost from globalisation and trade, irrespective of whether or not their countries ran a trade deficit or not, might be driving this change. IMF’s concern seems to be to evolve a coordinated global action to address these issues rather than see the world suffer in a trade war between its two largest economies , the US and China.
Will IMF be able to deliver on this? Conciliatory noises by the Trump administration — Trump saying he won’t fire the US federal reserve chairman, and the US treasury secretary saying current tariffs between US and China are unsustainable — in the aftermath of the WEO report suggest that all hope is not lost. India should hope for the best — and prepare for the worst.
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