IMF raises India's growth forecast to 6.6% for 2025 despite Trump's tariff tension

The International Monetary Fund's (IMF) latest World Economic Outlook (WEO) projects India's growth at 6.6% in 2025, underscoring its position as the fastest-growing major economy even as global output cools under the weight of new trade barriers imposed by the United States.

The October 2025 WEO shows India defying the broader deceleration that has gripped advanced and emerging economies alike. The IMF expects global growth to fall from 3.3% in 2024 to 3.2% in 2025 and 3.1% in 2026. 

In contrast, India's upwardly revised projection - up 0.1 percentage point from the July update - stems from a strong start to the year that has more than offset the drag from higher US tariffs on Indian goods.

India registered a robust GDP growth rate of 7.8% in the first quarter of FY 2025.

"In India, growth is projected to be 6.6 per cent in 2025 and 6.2 per cent in 2026. Compared with the July WEO Update, this is an upward revision for 2025, with carryover from a strong first quarter more than offsetting the increase in the US effective tariff rate on imports from India since July," the IMF said.

The Fund added that compared to its pre-tariff forecast in October 2024, India's overall growth loss remains marginal - just 0.2 percentage point lower cumulatively. 

Global momentum, meanwhile, remains weak. Advanced economies are projected to expand by only 1.6% in 2025–26, with the US slowing to 2.0%, while emerging markets and developing economies are expected to moderate to just above 4%.

China, hit hardest by US tariff escalation, is forecast to slow further to 4.8% in 2025 and 4.2% in 2026, cushioned only by a weaker currency, redirected exports toward Asia and Europe, and some fiscal expansion. Within Asia, India continues to anchor regional growth, buoyed by domestic consumption and steady investment inflows. 

At market exchange rates, the IMF expects world output to grow just 2.6% in both 2025 and 2026, slowing from 2.8% in 2024.