{"id":224441,"date":"2025-10-14T16:56:12","date_gmt":"2025-10-14T16:56:12","guid":{"rendered":"https:\/\/www.newsbeep.com\/us\/224441\/"},"modified":"2025-10-14T16:56:12","modified_gmt":"2025-10-14T16:56:12","slug":"trump-tariffs-to-slow-global-growth-to-3-2-indias-growth-to-stay-strong-with-6-6-in-2025-imf-report","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us\/224441\/","title":{"rendered":"Trump tariffs to slow global growth to 3.2%; India’s growth to stay strong with 6.6% in 2025: IMF report"},"content":{"rendered":"

Even as Donald Trump\u2019s new wave of tariffs redraws the world\u2019s trade map and clouds the global outlook, India<\/a> remains one of the few bright spots in an otherwise slowing global economy. The IMF<\/a>\u2019s October 2025 World Economic Outlook (WEO) projects India\u2019s growth at 6.6% in 2025, up from 6.5% in 2024, before moderating slightly to 6.2% in 2026, signalling continued domestic momentum despite rising trade barriers.<\/p>\n

By contrast, global output is expected to ease from 3.3% in 2024 to 3.2% in 2025 and 3.1% in 2026, as higher US tariffs slow trade and investment. This is well below the pre-pandemic average of 3.7%, reflecting a shift to a more fragmented and protectionist global landscape.<\/p>\n

The IMF said the world economy \u201cis adapting to a new policy landscape shaped by trade frictions, fiscal loosening, and divergent monetary paths.\u201d
Advanced economies are forecast to grow just 1.6% in 2025 and 2026, while emerging markets are expected to expand 4.2% and 4.0% over the same period. Within Asia, India remains the key growth driver, even as China\u2019s expansion slows to 4.8% in 2025 and 4.2% in 2026.<\/p>\n

The world\u2019s three largest economies — the US, the Euro Area, and China — are all showing signs of fatigue, with major manufacturing and export sectors softening and inflation proving stickier than expected.<\/p>\n

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The IMF attributes India\u2019s resilience to strong private consumption, robust services growth, and policy stability, even as the United States slows under its own protectionist measures.
\u201cHigher tariffs imposed by the United States are curtailing external demand, with profound implications for several large export-oriented economies, while heightened trade policy uncertainty is dampening firms\u2019 appetite for investment,\u201d the IMF said.
For India, the effect has been more muted so far. The IMF noted that the country\u2019s 2025 projection is an upward revision from its July update, with carryover from a strong first quarter \u201cmore than offsetting the increase in the US effective tariff rate on imports from India since July.\u201d<\/p>\n

Protectionism starting to bite: IMF
The Fund\u2019s October report marks the first full assessment of Trump\u2019s sweeping trade actions, which pushed effective US tariff rates to their highest in nearly a century before partial rollbacks.<\/p>\n

In a direct warning, the IMF observed, \u201cThere are increasing signs that the adverse effects of protectionist measures are starting to show. Patterns in net exports and inventories driven by front-loading behavior have largely reversed. Core inflation has risen in the United States, and unemployment has edged up. Inflation expectations are still fragile, worsening the trade-offs for monetary policymakers as uncertainty and tariffs start weighing on activity.\u201d<\/p>\n

The report cautioned that short-term resilience is giving way to longer-term strain, as the \u201ctactics that keep activity seemingly resilient \u2014 such as trade diversion and rerouting \u2014 are costly,\u201d leading to \u201csuboptimal reallocation of productive resources\u201d and \u201ctechnological decoupling.\u201d<\/p>\n

The IMF made clear that while the tariff shock of April 2025 initially appeared smaller than feared, the delayed impact is now materialising. \u201cFront-loading of consumption and investment gave a temporary boost to global activity in early 2025,\u201d it said, \u201cbut the drag from shifting policies is becoming visible in more recent data.\u201d<\/p>\n

India\u2019s cushion: Domestic demand and policy discipline
Amid this shifting terrain, India\u2019s domestic economy continues to provide insulation.<\/p>\n

The report noted that inflation in India came in below earlier forecasts, aided by stable food and energy prices, allowing the Reserve Bank of India to maintain a steady monetary stance.<\/p>\n

Unlike several advanced economies still running pandemic-era fiscal deficits, India\u2019s public finances remain relatively contained. The IMF flagged India as one of the few large economies where primary deficits are narrower than pre-pandemic averages and debt ratios broadly stable.<\/p>\n

Resilient domestic demand, a solid services sector, and record agricultural output have kept India\u2019s growth story intact, even as global trade slows.<\/p>\n

The Fund credited India\u2019s \u201cimproved policy fundamentals and private sector adaptability\u201d for cushioning against external volatility.<\/p>\n

Still, the report warned that \u201cexternal conditions are becoming more challenging,\u201d with \u201chigher tariffs imposed by the United States curtailing external demand\u201d and \u201cheightened trade policy uncertainty dampening firms\u2019 investment appetite.\u201d<\/p>\n

Global trade flows under pressure
The world\u2019s trade volume in goods and services is projected to grow 3.6% in 2025, slowing to 2.3% in 2026- reflecting a front-loaded pattern as companies rushed shipments ahead of tariff deadlines.<\/p>\n

In particular, the IMF noted that \u201cglobal trade activity was robust in the first quarter of 2025, driven by strong growth in US imports and in exports from Asia and the Euro area because of front-loading in anticipation of higher tariffs.\u201d<\/p>\n

But that short-term surge is fading. \u201cPatterns in inventories and net exports have largely reversed,\u201d the IMF said, pointing to signs of weakening in major trading hubs.<\/p>\n

For India, which remains less dependent on merchandise exports than many peers, the slowdown in global trade may not derail overall growth \u2014 though certain sectors such as textiles, steel, and electronics could face price pressures if tariffs persist.<\/p>\n

Inflation, investment and currency effects
So far, tariffs have had a limited impact on global prices, but the IMF expects the pass-through to widen as firms exhaust profit buffers.<\/p>\n

In the US, core goods inflation has begun to rise, while \u201cexporters in Asia and Europe may not be able to maintain lower prices for much longer, given margin pressures.\u201d<\/p>\n

In a key difference from earlier trade conflicts, the US dollar has depreciated, not strengthened, as investors sought to hedge against uncertainty \u2014 a move that, according to the IMF, \u201camplified the tariff shock but also supported global trade and provided policymakers in emerging markets with room to support their economies.\u201d<\/p>\n

The Fund cautioned, however, that as margins compress and uncertainty persists, \u201cthe adverse effects of protectionist measures are starting to show.\u201d<\/p>\n

A fragmented world economy
The October report frames 2025 as a turning point- from short-term resilience to a slower, more fragmented global expansion.<\/p>\n

Growth in advanced economies is projected to drop to 1.6%, weighed down by tighter financing and trade disruptions. The US will slow to 2.0% in 2025, Europe to 1.2%, while China cools to 4.8%.<\/p>\n

The IMF warned that protectionism\u2019s ripple effects could persist, as \u201ctechnological decoupling and limitations on knowledge diffusion are bound to restrain growth over the longer term.\u201d<\/p>\n

It also flagged the risk that trade-policy uncertainty could shave up to 2% off global investment within two years, echoing estimates from its earlier analyses.<\/p>\n

Challenges for India
For India, the challenge will be balancing domestic buoyancy with external fragility.<\/p>\n

Even as higher US tariffs alter global supply chains, India stands to gain from some trade diversion \u2014 particularly in electronics, chemicals, and auto components \u2014 but may also face secondary effects through weaker global demand.<\/p>\n

Still, the Fund expects India\u2019s strong domestic drivers to keep growth steady. \u201cThe economy continues to display resilience,\u201d it said, adding that the carryover from a strong first quarter has more than offset tariff-related headwinds.<\/p>\n

The IMF\u2019s October 2025 outlook captures a world economy still adjusting to Trump-era tariffs- smaller in size than initially feared, but more corrosive in effect.<\/p>\n

The headline message: global growth will cool, trade will thin, and uncertainty will linger.<\/p>\n

India, for now, remains the outlier- growing faster than any major economy, shielded by its consumption-driven model and steady macro fundamentals. But as the IMF warns, the longer protectionism persists, the harder it will be for even the most resilient economies to stay immune.<\/p>\n

Add \"ET as a Reliable and Trusted News Source<\/p>\n","protected":false},"excerpt":{"rendered":"Even as Donald Trump\u2019s new wave of tariffs redraws the world\u2019s trade map and clouds the global outlook,…\n","protected":false},"author":2,"featured_media":224442,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[36],"tags":[28,101,45224,2344,126097,126096,23396,44452,126095,121642,26548,126098],"class_list":["post-224441","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-imf","tag-india","tag-india-growth-outlook","tag-india-outlook","tag-indian-economy","tag-international-monetary-fund","tag-international-monetary-funds-world-economic-outlook","tag-kristalina-georgieva","tag-us-federal-reserve","tag-world-growth-outlook"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/224441","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=224441"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/224441\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/224442"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=224441"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=224441"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=224441"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}