The International Monetary Fund (IMF) Managing Director Kristalina Georgieva has projected that the Indian economy may experience a "little weaker" performance in 2025, even as global growth remains steady.
This statement was made during her annual media roundtable with reporters, where she addressed key economic trends and uncertainties influencing global and regional economies.
In her remarks, IMF Managing Director Kristalina Georgieva emphasized that while global economic growth in 2025 is expected to remain stable, there will likely be significant regional divergences. “The US is doing quite a bit better than we expected before, the EU is somewhat stalling, (and) India a little weaker,” she said.
Highlighting challenges faced by various economies, Georgieva noted:
United States: The US economy has shown resilience, outperforming earlier projections.
European Union: Growth in the EU has been stagnating.
China: The world’s second-largest economy faces deflationary pressures and challenges in boosting domestic demand.
Brazil: Inflationary pressures persist.
Low-Income Countries: These nations remain vulnerable to economic shocks despite ongoing recovery efforts.
Although Georgieva did not elaborate on why she expects India’s economy to weaken slightly in 2025, more details are anticipated in the upcoming World Economic Outlook Update. Experts speculate that factors such as global supply chain disruptions, geopolitical tensions, and fluctuating commodity prices could influence India's economic trajectory.
Georgieva also pointed to heightened uncertainties in the global economic environment, driven largely by the United States' trade policies under the incoming administration. Donald Trump, who will be sworn in as the 47th President of the United States on January 20, has announced plans to impose additional tariffs on countries like China, Canada, and Mexico.
“What we expect in 2025 is to have quite a lot of uncertainty, especially in terms of economic policies,” Georgieva said. She added that this unpredictability, particularly concerning trade policies, could create headwinds for medium-sized economies and regions integrated into global supply chains, including Asia.
This uncertainty is further reflected in rising long-term interest rates globally, even as short-term interest rates have declined.
Georgieva noted that global disinflation is likely to continue in 2025. “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. Advanced economies have been able to stabilize inflation rates faster compared to their emerging counterparts, potentially affecting global trade dynamics.
India remains a crucial player in the global economic landscape, with its rapid growth and expanding markets. However, the IMF’s forecast of a slightly weaker performance in 2025 signals the need for strategic measures to bolster resilience. These could include:
Enhancing trade relations amidst shifting global supply chains.
Mitigating the impact of geopolitical uncertainties on key sectors.
Strengthening domestic demand to counter external pressures.
India’s economic outlook for 2025, as forecasted by the IMF, highlights potential challenges amidst steady global growth. While uncertainties loom large due to global trade policies and inflation trends, India’s resilience will depend on its ability to adapt to shifting dynamics. Strategic interventions in trade, domestic demand, and geopolitical stability will play a pivotal role in navigating these headwinds.