Indian economy to grow 6.6% in 2025 despite US tariffs, projects IMF; warns of global ‘uncertainty’

The Indian economy is growing at a rate of 6.6% in 2025, according to the International Monetary Fund (IMF) World Economic Outlook (WEO) report.

This revision is due to the strong economic performance in the first quarter, which has significantly countered the impact of rising US tariffs on Indian goods. However, compared with the pre-tariff forecast in October 2024, growth is projected to be 0.2 percentage points lower, the IMF said.

India's growth is projected to overtake China, which is expected to grow by 4.8%. The IMF published its updated forecasts after considering the impact of US tariffs on multiple economies and the resulting agreements between nations amid rising uncertainty.

The IMF has reduced its 2026 forecast for India to 6.2%, citing a possible decline in first-quarter momentum.

In 2024-25, the Indian economy grew by 6.5% in real terms. Despite US tariff uncertainties, the government has kept the GDP forecast for 2025-26 steady at 6.3-6.8%, reflecting confidence in the strength of the country's domestic consumption, ANI reported.

Where do global growth numbers stand?

Due to tariffs having a smaller impact than anticipated, the IMF forecasts global growth at 3.2% in 2025, decreasing slightly to 3.1% in 2026.

The IMF's report mentioned that inflation is expected to decline globally, though with variation across countries, it is above target in the United States.

Advanced economies are projected to grow by an average of 1.6%, while emerging economies are expected to grow by 4.2%. The 2026 forecast indicates a 0.2% slowdown.

The IMF noted that the US will grow at 1.9%, down from 2.4% in 2024, while Spain will be the fastest-growing ‘advanced economy’, with a 2.9% growth rate.

IMF's global economic outlook

The IMF's October WEO forecasts are higher than their April projections but still show a downward revision compared to pre-tariff policies.

Highlighting the state of the world economy, IMF said, “The global economy is adjusting to a landscape reshaped by new policy measures. Some extremes of higher tariffs were tempered, thanks to subsequent deals and resets. But the overall environment remains volatile, and temporary factors that supported activity in the first half of 2025 such as front-loading are fading.”

Meanwhile, “prolonged uncertainty, more protectionism, and labour supply shocks” could reduce growth. While "fiscal vulnerabilities, potential financial market corrections, and erosion of institutions could threaten stability."

The IMF called on policymakers to rebuild confidence using credible, transparent, and sustainable policies, combined with trade diplomacy and macroeconomic adjustments.

"Fiscal buffers should be rebuilt. Central bank independence should be preserved. Efforts on structural reforms should be redoubled", the IMF said.