IMF MD forecasts ‘little weaker’ Indian economy in 2025 despite global growth, US trade policy in focus

International Monetary Fund (IMF) MD Kristalina Georgieva has predicted that the Indian economy is likely to be “a little weaker” in 2025 despite pojected steady global growth, according to a PTI report.

She cited uncertainty around the United States trade policy under the coming Donald Trump administration as the key factor affecting the Indian and other world economy this year, it added.

IMF MD Kristalina Georgieva Says…

In her annual media roundtable with a group of reporters on January 10, Georgieva said global growth is expected to be steady in 2025, but with regional divergence.

• She expects the Indian economy to be a little weaker in 2025. However, she did not explain it any further and the report added that the World Economy Outlook update week will have more details about it.
• “The US is doing quite a bit better than we expected before, the EU is somewhat stalling, (and) India a little weaker," she said.
• Brazil was facing somewhat higher inflation, she said.
• In China, the world’s second-largest economy, the IMF sees deflationary pressure and ongoing challenges with domestic demand, she said.

New Shocks May Affect Low Income Countries…

"Low-income countries, despite all the efforts they are making, are in a position when any new shock can affect them quite negatively,” Georgieva said.

“What we expect in 2025 is to have quite a lot of uncertainty, especially in terms of economic policies. Not surprisingly, given the size and role of the US economy, there is keen interest globally in the policy directions of the incoming administration, in particular on tariffs, taxes, deregulation and government efficiency,” she added.

US Trade Policy, Donald Trump Factor Push Uncertainty

“This uncertainty is particularly high around the path for trade policy going forward, adding to the headwinds facing the global economy, especially for countries and regions that are more integrated in global supply chains, medium-sized economies, (and) Asia as a region," she said.

She further added that this uncertainty is being expressed globally through higher long-term interest rates, even though short-term interest rates have gone down.

Trump, 78, will be sworn in as the 47th US President on January 20. He has publicly announced the use of tariffs as a key policy tool and said additional tariffs would be imposed on countries like China, Canada and Mexico. 

On inflation, the IMF expects global disinflation to continue, Georgieva said. “As we all recognise, the higher interest rates that were necessary to fight inflation did not push the world economy into recession. They have delivered the desired results. Headline inflation is converging back to target sooner in advanced economies than in emerging markets,” she said.

(With inputs from PTI)