Washington: The Indian economy is expected to be "a little weaker" in 2025 despite steady global growth, IMF Managing Director Kristalina Georgieva has said. Kristalina also expects quite a lot of uncertainty in the world this year, mainly around the US trade policy. In her annual media roundtable with reporters on Friday, she said global growth is expected to be steady in 2025 but with regional divergence. Kristalina said she expects the Indian economy to weaken in 2025. However, she did not explain it any further. The World Economy Outlook update week will have more details about it.
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Indian economy weaker; global uncertainty in 2025.
“The US is doing quite a bit better than we expected before, the EU is somewhat stalling, (and) India a little weaker," she said. Brazil was facing somewhat higher inflation, she said. In China, the world’s second-largest economy, the International Monetary Fund (IMF) was seeing deflationary pressure and ongoing challenges with domestic demand, she said. "Low-income countries, despite all the efforts they are making, are in a position when any new shock can affect them quite negatively,” Kristalina said.
IMF Chief Highlights Global Economic Uncertainty Amid Incoming US Administration, Policy Shifts
“What we expect in 2025 is to have quite a lot of uncertainty, especially in terms of economic policies. Not surprisingly, given the size and role of the US economy, there is keen interest globally in the policy directions of the incoming administration, in particular on tariffs, taxes, deregulation and government efficiency,” Kristalina said and added that this uncertainty is particularly high around the path for trade policy going forward, adding to the headwinds facing the global economy, especially for countries and regions that are more integrated into global supply chains, medium-sized economies, (and) Asia as a region. The IMF Managing Director said that uncertainty is expressed globally through higher long-term interest rates, even though short-term interest rates have gone down.
Donald Trump will be sworn in as the 47th President of the United States on January 20, replacing Joe Biden at the White House. Trump, 78, has announced plans to impose additional tariffs on countries like China, Canada and Mexico. He has publicly announced the use of tariffs as a key policy tool. On inflation, the IMF expects global disinflation to continue, Kristalina said.
"As we all recognise, the higher interest rates that were necessary to fight inflation did not push the world economy into recession. They have delivered the desired results. Headline inflation is converging back to target sooner in advanced economies than in emerging markets,” she further said.
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