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Informist, Tuesday, Apr. 22, 2025

 

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--IMF cuts India FY26 GDP growth forecast by 30 bps to 6.2%
--IMF cuts India FY27 GDP growth forecast by 20 bps to 6.3%
--IMF: Cut India FY26 growth forecast on trade tensions, global uncertainty
--IMF sees India FY26 CPI inflation at 4.2%, FY27 at 4.1%
--IMF cuts global growth forecast for 2025 by 50 bps to 2.8%
--IMF cuts global growth forecast for 2026 by 30 bps to 3.0%
--IMF cuts US growth forecast for 2025 by 90 bps to 1.8%
--IMF: Major policy shifts resetting global trade, increasing uncertainty
--IMF: Lower global growth projections reflect impact of US trade measures

 

NEW DELHI – The International Monetary Fund has lowered its near-term growth forecasts for India on "account of higher levels of trade tensions and global uncertainty". The multilateral funding agency slashed India's GDP growth forecast for the current financial year started April by 30 basis points to 6.2% and for the next year by 20 bps to 6.3%.

 

India's growth outlook is relatively more stable compared to other countries, supported by "private consumption, particularly in rural areas", the IMF said in the April edition of its World Economic Outlook.

 

The IMF's growth forecast for India in FY26 is less optimistic than the projections by the Reserve Bank of India. The Indian central bank earlier this month lowered India's GDP growth forecast for FY26 by 20 bps to 6.5%, citing the impact of global trade and policy uncertainties. India's GDP is seen expanding 6.5% in FY25, as per the government's second advance estimate.

 

The IMF projected India's average inflation to fall to 4.2% in FY26 from 4.7% last year. The IMF's inflation forecast for this year is 20 bps higher than the RBI's projection of 4.0%. In the next financial year, inflation is seen at 4.1%, the outlook said.

 

The IMF is the latest to downgrade India's growth forecast because of the global uncertainty caused by the tariff policies of the US. US President Donald Trump on Apr. 2 announced reciprocal tariffs on Washington's trading partners, including a 26% levy on India. Trump has since announced a 90-day pause on these tariffs except for China, which now faces a levy of up to 245%. 

 

The IMF has drastically cut its forecast for global growth because of the rising uncertainties. It lowered the global growth forecast for 2025 by 50 bps to 2.8% and for 2026 by 30 bps to 3.0%. The multilateral body lowered the growth forecast for all countries except Russia and Spain, reflecting in "large part the direct effects of the new trade measures and their indirect effects through trade linkage spillovers, heightened uncertainty, and deteriorating sentiment."

 

The US economy is now projected to grow 1.8% in 2025, 90 bps lower than previously expected, the IMF said. "The downward revision is a result of greater policy uncertainty, trade tensions, and a softer demand outlook, given slower-than-anticipated consumption growth," it said. The world's largest economy is projected to expand 1.7% in 2026, 40 bps lower than estimated earlier, as tariffs are expected to weigh on it, amid moderate private consumption.

 

The IMF also lowered the growth forecast for China, which is projected to expand 4.0% in 2025, 60 bps lower than the earlier estimate. For 2026, China's growth forecast was cut by 50 bps to 4.0% as well. China's GDP is estimated to have grown 5.0% last year. Lower growth projections for China were owing to the tariff policies and the fiscal expansion announced in its Budget, the IMF said.  End

 

Reported by Shubham Rana

Edited by Saji George Titus

 

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