India-US Tariff War: India's GDP Growth Unhindered by US Tariffs, IMF Raises Forecast

The International Monetary Fund (IMF) has delivered positive news for India's economy, revising its GDP growth forecast upwards. In its latest World Economic Outlook (WEO) report, the IMF increased India's GDP growth projection for 2025-26 from 6. 4% to 6. 6%. This significant revision is a testament to the Indian economy's strong momentum, which has successfully absorbed the potential impact of new tariffs imposed by the United States on Indian exports.

Strong Q1 Performance Boosts Confidence

According to the IMF report, India's economy recorded an impressive 7, while 8% growth in the April-June quarter, marking its best performance in the last five quarters. This strong start played a crucial role in mitigating the effects of US tariffs. The IMF stated, "Our forecast for 2025 is better than before. A strong first-quarter start offset the impact of tariffs, although the forecast for 2026 has been slightly lowered. " Strong domestic demand, a thriving manufacturing sector, and the government's capital expenditure policies have been key drivers of this sustained growth, while

World Bank Also Upgrades Outlook

Beyond the IMF, the World Bank also upgraded India's GDP forecast for the current fiscal year (2024-25) from 6. 3% to 6. 5% earlier this month. The World Bank anticipates that India will remain the world's fastest-growing major economy in the near future. While the IMF raised its 2025-26 estimate, it slightly lowered the GDP growth projection for 2026-27 from 6. 4% to 6. 2%, attributing this modest reduction to global trade uncertainties and other economic challenges.

A Look at the Global Economy

The IMF also shared its global economic growth projections. The report expects world economic growth to decelerate from 3. 3% in 2024 to 3. 2% in 2025 and 3. 1% in 2026, while this is a slight improvement from July but 0. 2% lower than previous October 2024 estimates. The IMF cites protectionist policies, trade uncertainties, and broader macroeconomic challenges as reasons for this slowdown, while despite these global headwinds, India's consistent strong performance and effective government policies are pivotal in maintaining its position as one of the world's fastest-growing economies.