India to grow 6.4% in 2025 and 2026, reform momentum driving stable growth: IMF
The IMF released its World Economic Outlook (WEO) Update on Tuesday.
It said that growth in India is projected to be 6.4 percent in 2025 and 2026, with both numbers revised slightly upward, reflecting a more "benign external environment" than assumed in the April reference forecast.
In a footnote, the IMF said that for India, data and projections are presented on a fiscal year (FY) basis.
India's growth projections are 6.7 percent for 2025 and 6.4 percent for 2026, based on the calendar year.
During a press briefing, IMF Research Department Division Chief Deniz Igan, responding to a question on India, said, "We have actually quite stable growth for the country."
"India, which grew at 6.5 percent in 2024, is projected to grow at 6.4 percent in 2025 as well as in 2026. The 6.4 percent growth rates for this year and next are slight upgrades compared to what we had in April - 0.2 percentage points in 2025 and 0.1 percentage point in 2026," she said.
Igan said that the driver of this relatively stable growth for India "is the fact that there has been a reform momentum supporting robust consumption growth and a push for public investment."
She said that going forward, it will be important for India to "keep this momentum going and to continue the recent good growth performance that we have seen."
For India, the priorities would include fostering job creation and absorbing excess labour from the agricultural sectors by reskilling labour, by allowing more labour market flexibility, while at the same time, continuing to invest in infrastructure and removing trade restrictions.
"More in the medium term, India needs to continue to invest in education, take a step at land reform and expand social safety net and reduce red tape to allow businesses perform better," she said.
The IMF said that in emerging market and developing economies, growth is expected to be 4.1 percent in 2025 and 4.0 percent in 2026.
Relative to the forecast in April, growth in 2025 for China is revised upward by 0.8 percentage point to 4.8 percent.
This revision reflects stronger-than-expected activity in the first half of 2025 and the significant reduction in US-China tariffs.
Growth in 2026 is projected at 4.2 percent, again reflecting the lower effective tariff rates, the IMF said.
The IMF said that global growth is projected at three per cent for 2025 and 3.1 percent in 2026.
The forecast for 2025 is 0.2 percentage points higher than that in the reference forecast of the April 2025 World Economic Outlook and 0.1 percentage points higher for 2026.
This reflects stronger-than-expected front-loading in anticipation of higher tariffs; lower average effective US tariff rates than announced in April; an improvement in financial conditions, including due to a weaker US dollar; and fiscal expansion in some major jurisdictions.
Growth in advanced economies is projected to be 1.5 percent in 2025 and 1.6 percent in 2026.
In the United States, with tariff rates settling at lower levels than those announced on April 2 and looser financial conditions, the economy is projected to expand at a rate of 1.9 percent in 2025.
This is 0.1 percentage point higher than the April reference forecast, with some offset from private demand cooling faster than expected and weaker immigration. Growth is projected to pick up slightly to 2.0 percent in 2026, it said.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Economic Times
12 minutes ago
- Economic Times
US-Russia-India tensions could spark crude oil prices to touch $80 per barrel
Synopsis Oil market experts predict Brent crude oil prices will likely surge to USD 80 per barrel due to escalating US-Russia tensions threatening global oil supplies. Potential sanctions and tariffs on countries trading with Russia, initiated by the US, could further inflate prices. Disruptions in Russian oil flow could push prices even higher, potentially reaching USD 100-120 per barrel. ANI Representative image. Brent crude oil prices are expected to rise to USD 80 per barrel in the coming months as tensions between the United States and Russia threaten to disrupt the global oil supply chain, highlighted oil market experts in conversation with prices may face upward pressure as geopolitical risks increase. NS Ramaswamy, Head of Commodities & CRM at Ventura, said, "Brent Oil (Oct'25) from USD 72.07 has a short-term target of USD 76. Year end 2025 could reach USD 80-82. Downside support and cap at USD 69. U.S. President Donald Trump has given Russia a deadline of 10-12 days to end the war in Ukraine, failing which it runs a risk of additional sanctions and secondary tariffs of 100 per cent on countries trading with Russia, which would push the oil prices higher."This move by US President Trump could further increase oil prices, as countries dependent on Russian crude would face a difficult choice between buying cheaper oil and facing heavy export tariffs to the WTI Crude Oil (Sep'25), experts expect a short-term target of USD 73 from the current level of USD 69.65. The price could rise to USD 76-79 by the end of 2025, while the downside support is at USD 65. Experts said such developments could disrupt the global oil market. A supply shock may result from reduced spare production capacity, which would likely push oil prices higher through dilemma remains that President Trump wants lower oil prices, but a quick increase in US oil production is not possible, as it involves infrastructure, labour, and expert Narendra Taneja told ANI, "Russia exports 5 million barrels of oil into the global (oil) supply system every day. Crude oil prices would rise significantly - USD 100 to 120 per barrel, if not more - if the Russian oil is forced out of the global supply chains".He also added, "If Russian oil stops flowing into Indian refineries, prices would rise globally for sure. There would be no shortage of oil in India because our refiners import from 40 different countries, but balancing the price for consumers would be a challenge."Even if Saudi Arabia and select OPEC countries step in to fill the supply gap, it will take time, adding to short-term price pressure. The oil market could shift into a deficit situation even if OPEC+ does not announce further production the recent US-EU trade deal has provided some support to the market, but geopolitical tensions persist and continue to add upside risks. The market is also closely watching US inventory levels and the upcoming interest rate decision, with a stronger US dollar keeping some pressure on oil extended US-China trade truce has also supported market sentiment, but risks remain elevated in the oil sector.
&w=3840&q=100)
Business Standard
42 minutes ago
- Business Standard
India reacts with outrage to Trump's tariff hike, 'dead' economy remarks
India is hardly alone in facing Trump's trade wrath - and not the subject to the very highest rates - but the news left business and political leaders wondering how to cope with the fallout Bloomberg By Satviki Sanjay and Swati Gupta Shock, dismay and angst swept across India as businesses, policymakers and citizens digested US President Donald Trump's sharp remarks and a surprise 25 per cent tariff rate earlier this week. While Indian government officials weighed a response and business groups tallied the cost of the trade barrier, the local social media flared up with users protesting Trump's comments and criticizing Indian Prime Minister Narendra Modi for not speaking up. It started with Trump saying that India's trade barriers were the 'most strenuous and obnoxious,' in a Truth Social post July 30. He added the US may also impose a penalty for New Delhi's purchase of Russian weapons and energy. Less than a day later, he ripped into India again for aligning with Russia, calling them 'dead economies' in another post. I don't think any head of state has insulted India as Trump does. I don't know how @narendramodi calls him a friend and doesn't speak up. Tariffs, penalties, and saying 'I don't care what India does with Russia. They can take their dead economies down together, for all I care. — Maheshwer Peri (@maheshperi) July 31, 2025 With no imminent trade deal, the 25 per cent tariffs kicked in as of Friday. India is hardly alone in facing Trump's trade wrath — and not the subject to the very highest rates — but the news left business and political leaders wondering how to cope with the fallout. 'Blunt-Force' Message 'Overnight, the US-India trade equation shifted from tense to turbulent,' said Akshat Garg, assistant vice president at Choice Wealth, a Mumbai based financial services firm. The levies 'feel less like structured policy and more like a blunt-force political message.' Complicating the narrative around the India trade deal — or the lack of it — was the US pact with its traditional rival Pakistan that came through on the same day. As the US released rates across the world on Aug. 1, India's relative disadvantage to competitor exporting countries became more apparent, dampening moods and stoking tempers further. 'The biggest blow is that Pakistan and Bangladesh got a better rate than us,' V. Elangovan, managing director at SNQS Internationals, an apparel maker in the south Indian manufacturing hub of Tirupur, told Bloomberg News. 'We were expecting something in the 15 to 20 per cent range.' India's annoyance can be traced back in part to Trump declaring himself the peacemaker that helped broker a ceasefire in the armed conflict between India and Pakistan in May. The move was seen as an effort to upstage Modi and put the two South Asian neighbors on an equal footing, despite India's larger military and economy. The events of this week have cemented that impression further in the eyes of some Indian observers. India has hoped it could do a fair deal with US. But succumbing to bullying is not part of the deal. At the end of the day, a trade deal has to be fair, and it must ensure that lives of Indians become better, not worse. Trump too shall pass. US tariffs are not the end of the… — sushant sareen (@sushantsareen) July 30, 2025 When the tariff rate news first dropped in late Wednesday evening in India, Ashish Kanodia recalls being 'very disturbed.' A director at Kanodia Global, a closely held exporter that gets over 40 per cent of its revenue from the US selling home fabrics to toys, the entrepreneur already has two of its largest US customers seeking discounts to make up for the levy. 'The next six months are going to be difficult for everyone,' Kanodia said, adding that profit margins will be squeezed. If the pain continues for 'months and months,' he said he'll have to start cutting his workforce. The US is India's largest trading partner, with the two-way trade between them at an estimated $129.2 billion in 2024. Compared with India's 25 per cent, Bangladesh was subjected to a 20 per cent tariff, Vietnam got a 20 per cent levy and Indonesia and Pakistan each received 19 per cent duties. 'We know that we have got a deal that is worse than other countries,' said Sabyasachi Ray, executive director at The Gem and Jewelry Export Promotion Council. 'We will take it up with the government.' Quite the unravelling of the Delhi - Washington relationship over the past 48 hours... ???????????????? > Trump announces 25% tariffs against India > Trump announces oil deal with Pakistan > US imposes sanctions against Indian petrochem companies for trading with Iran — Kabir Taneja (@KabirTaneja) July 31, 2025 Trump's actions mark a 180-degree turn for New Delhi's hopes of preferential treatment over regional peers. It was among the first to engage Washington in trade talks in February, confident of hammering out a deal sooner than others. Trump had called India's Prime Minister Narendra Modi 'my friend' in a Feb. 14 post on X and the bond between the two countries 'special.' India is now weighing options to placate the White House, including boosting US imports, Bloomberg News reported citing people familiar with the matter, and many hope that the bilateral relationship and the tariff rate can still be improved. 'It is a storm in the India-US relationship at this moment but I think there's a good chance that it will go away,' Vivek Mishra, deputy director of the Strategic Studies Programme at Delhi based Observer Researcher Foundation, told Bloomberg News. Indian business and trade groups are supporting the government's stance on the deal as the negotiations for a US-India trade deal continue. Negotiating Tactic Jewelry businesses 'are worried but they are not panicking' because they hope a more favorable deal can be worked out, said Ray of the gems export body. 'The negotiation that should be happening should be a win-win, not a win-lose.' The abrupt announcement by Trump over social media when negotiations with India were ongoing 'seems like a knee-jerk reaction,' according to Rohit Kumar, founding partner at public policy research firm The Quantum Hub. 'This appears to be a negotiating tactic aimed at unresolved discussion points,' Kumar said.
Mint
42 minutes ago
- Mint
India-US trade deal: Top five roadblocks that may arise after Trump's tariffs on India
India-US trade deal: Despite strong strategic ties, a comprehensive India-US trade deal remains elusive. The probability of getting it inked in the near term looks dicey after the imposition of Trump's tariffs on India. In retaliation, the Indian government is also considering levying a digital tax on US companies like Microsoft, Google, Meta, Amazon, etc. However, both countries, especially US President Donald Trump, remain committed to continuing talks for a possible India-US trade deal. According to experts, Trump's tariff on India is expected to hit Indian exports by $33 billion. The Indian government may compensate by imposing reciprocal taxes on US imports. They said the Indian government may think of reimposing digital tax on US companies after removing it from 1st April 2025. However, they maintained that after Trump's tariffs on India, the Narendra Modi government may go tough on the negotiations, especially on the US government's demand to provide Access to the Indian dairy and agriculture segment. They said that penalties on Russian crude oil imports, an unpredictable trade negotiation environment, mutual mistrust, etc., are some other roadblocks that may arise in the India-US trade deal after Trump's tariffs on India. Speaking on the roadblocks in the India-US trade deal, especially after Trump's tariffs on India, Utsav Verma, Head of Research — Institutional Equities at Choice Broking, said, "India-US trade negotiations are less about tariffs and more about reconciling fundamentally divergent policy philosophies. For any forward movement, establishing a permanent consultative mechanism, calibrated concessions in sensitive sectors, and depoliticized trade diplomacy are prerequisites." Verma said that future progress will likely depend on the outcome of upcoming leadership cycles, alignment on digital trade rules, and a reimagining of economic partnership beyond WTO-era thinking. "Biggest roadblock in the India-US trade deal post-imposition of Trump's tariffs on India is India's loss of around $33 billion in exports. To compensate for those losses, the Indian government may develop reciprocal taxes, which may become a roadblock in the India-US deal. The Indian government may go tough on the US demand for Access to the dairy and agriculture segment. At the same time, the US may not comply with the Indian demands on the Russian crude oil imports," said Avinash Gorakshkar, a SEBI-registered fundamental analyst. On the reciprocal taxes India may levy on the US, Avinash Gorakshkar said, "The way the US government has raised tariffs on Indian imports, the Indian government may also raise tariffs on US imports. They may also think of reimposing the digital tax on income from online digital advertisements from US companies. If they do so, it would be highly detrimental for US tech giants like Microsoft, Meta, Alphabet, Google, Amazon, etc." Experts said the most-awaited deal may face some major roadblocks, including mutual mistrust, an unpredictable negotiation environment, US demand for Access to the dairy and agriculture segment, strategic autonomy against geopolitical alignment, and a penalty on Russian crude oil imports. 1] Mutual mistrust: "India-US trade tensions have been shaped by over 90 WTO disputes since 1995 (WTO, 2024). The 2019 end of GSP benefits affected $5.6 billion in Indian exports (USTR, 2020). In 2024, the US reported a $27.4 billion trade deficit with India (US Census Bureau), fueling calls for better Access. India, however, sees these demands as imbalanced. A 2023 Brookings survey found only 41% of Indian policymakers viewed US trade policy as mutually beneficial. Still, trust has grown in defence, pharma, and tech. During COVID-19, both nations collaborated, and US FDI in India reached $8.3 billion in FY23 (DPIIT)," said Utsav Verma of Choice Broking. 2] Russian crude oil imports: "Even though Trump's tariffs have left Indo-Russian crude oil business untouched, the uncertainty around the implementation of penalties due to the import of Russian crude persists. Already, Indian refineries have started to reduce imports, which can increase the cost of crude and impact currency and inflation," said Vinod Nair, Head of Research at Geojit Investments. 3] Unpredictable negotiation environment: "US policy shifts—from Obama to Biden—have made trade negotiations volatile. Tariffs on steel (25%) and aluminium (10%), renewed in 2025, worsened uncertainty. Talks during 2023–25 were delayed thrice due to political cycles. Unlike the EU or ASEAN, India and the US lack a formal negotiation council. Utsav Verma said the Trade Policy Uncertainty Index rose 32% for India-US trade post-2022, compared to 18% for EU-US (EPU Project, 2024). 4] Access to dairy, agriculture segment: "Agriculture supports 58% of India's rural workforce (NABARD, 2023). Opening dairy markets could expose smallholders to subsidized US imports. The US seeks entry for poultry, corn, ethanol, and hormone-treated dairy, raising safety and religious concerns. India's average agri-tariffs stand at 39.5%, with bound rates at 113.1%, against the US's 5.4% (WTO, 2024). A NITI Aayog-CRISIL study shows a 10% US dairy entry could cut Indian prices by 17%. India exported $4.3 billion in agri-products to the US in FY24 but imported only $860 million (APEDA, 2024). Still, partnerships in agritech and sustainable farming—like joint ethanol blending and improved standards —suggest opportunities, said Verma. 5] Geopolitical divergence: Pointing towards the strategic autonomy against the geopolitical alignment, Utsav Verma of Choice Broking, said, "India's $10 billion defence ties with Russia challenge US alignment goals (SIPRI, 2024). India resists being cast solely as a counterweight to China and maintains sovereignty—as seen in its completion of the S-400 deal despite CAATSA threats. Defence trade with the US reached $20 billion in 2024 (US DoD), yet digital cooperation lags due to India's focus on data sovereignty. With elections looming (India in 2029, US in 2028), nationalism may complicate compromise. Nonetheless, shared interests in Indo-Pacific security, climate tech, and resilient supply chains provide buffers that keep strategic engagement intact." Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
