 delivered an optimistic outlook for the global economy, marginally raising its growth projections){kind=link}
New Delhi, India | July 30, 2025 – The International Monetary Fund (IMF) on Tuesday delivered an optimistic outlook for the global economy, marginally raising its growth projections, with India also poised for stronger expansion than previously estimated. In its latest World Economic Outlook (WEO) update for July 2025, the IMF highlighted a “more benign external environment” as a key factor contributing to the upward revisions.
The global economy is now projected to grow at 3.0% in 2025, an increase of 0.2 percentage points from its earlier estimate of 2.8%. The forecast for 2026 has also been marginally revised upwards to 3.1%. This improved global outlook, according to the IMF, reflects several factors: stronger-than-expected “front-loading” of trade activity in anticipation of higher tariffs, lower average effective US tariff rates than initially announced in April, an improvement in financial conditions partly due to a weaker US dollar, and fiscal expansion in some major economies.
For India, the IMF has raised its growth projection for both 2025 and 2026 to 6.4%. This represents a 0.2 percentage point increase from its previous estimate for the fiscal year ending March 2026, solidifying India’s position as the world’s fastest-growing major economy. The IMF’s projections for India are presented on a fiscal year basis, while calendar year projections also show robust growth.
Beyond India, other major economies also saw their growth estimates revised upwards. China’s growth forecast, in particular, received a significant boost of 0.8 percentage points, now projected at 4.8% in 2025. The United States economy is expected to expand by 1.9% in 2025 and 2.0% in 2026, benefiting from factors like lower tariff rates, eased financial conditions, and the effects of domestic fiscal packages.
Despite this cautiously optimistic tone, the IMF underscored that risks to the global outlook remain tilted to the downside. These include the potential for a rebound in effective tariff rates, elevated uncertainty weighing on economic activity as deadlines for additional tariffs approach without concrete agreements, and geopolitical tensions that could disrupt global supply chains and trigger commodity price spikes.
The IMF’s report also touched upon global inflation, expecting headline inflation to decline to 4.2% in 2025 and further to 3.6% in 2026. However, it cautioned about notable cross-country differences, predicting that inflation will remain above target in the United States while being more subdued in other large economies.
The updated World Economic Outlook emphasizes the need for policymakers to ensure confidence, predictability, and sustainability by addressing geopolitical tensions, maintaining price and financial stability, restoring fiscal buffers, and implementing necessary structural reforms to boost long-term productivity.