IMF Raises India Growth Forecast to 7.3% for 2025

The “International Monetary Fund” (IMF) has upgraded India’s economic growth forecast for 2025 to 7.3%, underscoring the country’s resilience amid global trade disruptions and tariff-related uncertainties. The revision reflects stronger-than-expected domestic performance and sustained economic momentum, even as protectionist pressures continue to weigh on the global outlook.

Drivers Behind the Upward Revision

In its latest World Economic Outlook update, the IMF raised India’s 2025 growth estimate by 0.7 percentage point. The Fund attributed this upgrade to robust corporate earnings in the December quarter and solid activity extending into the final quarter of the fiscal year. Improved investment sentiment and steady domestic demand were also cited as key contributors supporting near-term growth prospects.

Medium-Term Growth Expected to Moderate

Despite the upbeat outlook for 2025, the IMF projects India’s growth to moderate to 6.4% in both 2026 and 2027. The slowdown is expected as what the Fund described as “cyclical and temporary factors” fade. These include post-pandemic demand normalisation and the tapering impact of short-term fiscal and monetary support measures that had boosted activity in the recent past.

India’s Role in the Global Economy

The IMF reiterated that India remains a critical growth engine for the global economy. Officials highlighted that India’s performance stands out at a time when several major economies are grappling with slower expansion due to trade tensions and geopolitical uncertainty. The upgrade also follows a recent upward revision by the “National Statistics Office”, which estimated higher growth for the year ending March 2025 than initially projected by the government.

Imporatnt Facts for Exams

• IMF releases the World Economic Outlook twice a year with periodic updates.
• India is projected to remain the fastest-growing major economy globally.
• Growth moderation is linked to fading cyclical and temporary factors.
• NSO provides official estimates of India’s GDP growth.

Global Context and Comparative Outlook

At the global level, the IMF noted unexpected resilience despite US-led trade disruptions. Global growth is projected at 3.3%, supported by strong technology and artificial intelligence-led investments, particularly in North America and Asia. The Fund also upgraded growth forecasts for the United States and China, reflecting easing trade frictions and renewed investment momentum, even as global risks from tariffs and policy uncertainty persist.