2025-10-08T15:40:34Z

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Did you know that while global economic growth is slowing, India is stepping up as a major growth engine? This surprising shift was highlighted by Kristalina Georgieva, the Managing Director of the International Monetary Fund (IMF), during her recent address on changing global growth patterns.

Georgieva stated that global growth is now forecast at just 3% over the medium term—down from a more robust 3.7% prior to the pandemic. This slowdown comes at a time when China’s economy is decelerating, creating a unique opportunity for India to emerge as a key player on the global stage.

With crucial meetings on the horizon—including finance ministers and central bank governors gathering at the World Bank and IMF next week—trade discussions are expected to take center stage. This comes in the wake of US President Donald Trump’s earlier decision to impose sweeping tariffs on various countries, stirring up concerns about a global trade war.

Despite these tensions, Georgieva remains cautiously optimistic. She pointed out that the global economy has shown resilience, driven by decisive economic policies from countries, adaptability in the private sector, and tariffs that have turned out to be less severe than initially feared. However, she warned that this resilience has yet to be fully tested. A significant indicator of this uncertainty? The soaring global demand for gold.

Meanwhile, the World Bank recently adjusted its growth forecast for India, raising it for FY26 to 6.5% from 6.3%, while slightly trimming the FY27 estimate to 6.3%. This follows a remarkable GDP growth of 7.8% in the April-June quarter—the fastest pace seen in five quarters.

Despite the optimistic outlook, the shadow of US tariffs looms large, with a notable 50% tariff on Indian goods, including a hefty penalty for importing Russian oil. Georgieva emphasized that the US tariff rate has decreased from 23% in April to 17.5% today, yet the effective tariff rate of around 10% remains significantly higher compared to global averages.

While the world has avoided a full-blown trade war so far, Georgieva cautions that the impact of these tariffs is still unfolding, leaving the resilience of the global economy under scrutiny. Thus, the IMF’s forecast expects growth to stabilize around 3%—a stark reminder of the challenges that lie ahead as we navigate this complex economic landscape.