The International Monetary Fund (IMF), in its April 2025 update to the World Economic Outlook, has lowered India’s GDP growth estimate for FY26 to 6.2%, down from 6.5% projected in January. The revision comes amid growing trade tensions and global economic uncertainty.
According to the IMF, the outlook remains supported by private consumption, particularly in rural regions. However, heightened global trade disruptions and economic unpredictability have contributed to a downward adjustment of 30 basis points.
Consumer inflation in India is expected to ease to 4.2% in FY26 from 4.7% in FY25. For FY27, inflation is projected to decline further to 4.1%.
India’s longer-term economic trajectory is also under review. Between 2025 and 2050, growth is expected to decline marginally by 0.7 percentage points, although favourable demographics are likely to support the economy in the near term.
India’s central bank recently cut its FY26 growth estimate to 6.5%, down from 6.7% in February. Some brokerages have projected the growth rate even lower, at 6.1%. The government’s Economic Survey has pegged the range between 6.3% and 6.8%.
The IMF has also revised global growth projections. The world economy is now expected to grow at 2.4% in 2025, down from 3.5% in 2024. This is 80 basis points lower than the January forecast. Trade growth is expected to slow to 1.7%.
Recent tariff hikes by the US, starting in January and culminating in widespread levies by April 2, have affected global growth projections. The IMF noted that these tariffs have increased global economic uncertainty and disrupted existing trade structures. The US effective tariff rate has now exceeded levels seen during the Great Depression.
Read more: IMF Raises Concerns Over Indian NBFCs’ High Exposure to Power and Infrastructure!
While India’s short-term outlook remains steady, global developments, particularly in trade policy are beginning to reflect in growth projections, with further adjustments possible in future updates.
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Published on: Apr 23, 2025, 1:54 PM IST
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