Aaccording to IMF Managing Director Kristalina Georgie the Indian economy will be “a little weaker” in 2025. She said the global growth will be steady, but there is major uncertainty over the global economic landscape, mainly about the trade policies of the US.
Global economic growth is to have been stable going into 2025 according to Georgieva, however that regional variations of this were certain. Georgieva says while the US economic performance exceeded anticipation, EU witnessed something which could only be termed stagnating. However when it comes to India she commented that that shall be little lesser, and no further clarifies why. More details will be provided during the World Economy Outlook update.
Economic Policy Directions
The IMF Managing Director expressed her concerns about uncertainty, especially in economic policies. She said that the decisions of the new US administration on tariffs, taxes, deregulation, and government efficiency will be critical, especially with regard to global trade policy. This uncertainty, she explained, is contributing to higher long-term interest rates, even though short-term rates have declined.
Challenges for Low-Income Countries
Georgieva also indicated that emerging markets remain vulnerable to the economic shocks. Deflationary forces and low domestic demand persist as challenges facing the economy of China. About inflation, IMF projects that continued global disinflation will take place, and with advanced economies convergence more quickly than emerging markets into inflation targets.
US Trade Policy Under Trump
This uncertainty is worse since this is under the leadership of the newly inaugurated 47th President of the United States, Donald Trump, as he assumes his post on January 20. While campaigning and addressing the electorate during his speech, he announced intentions to set even more taxes for countries such as China, Canada, and Mexico. Therefore, he will make tariffs a central tool in his economic agenda.
Concluding, Georgieva noted that higher interest rates to contain inflation haven’t triggered a global recession, but have yielded the desired effects in terms of the fall in inflation, as the same is now falling steadily to the target level in advanced economies.
