The Indian economy is expected to be ‘a little weaker;’ in 2025, according to International Monetary Fund (IMF) MD Kristalina Georgieva, despite projected steady global growth, the agency said.
She stated that the main factor influencing the Indian and other global economies this year is the uncertainty surrounding US trade policy under the incoming Donald Trump administration.
Georgieva told reporters in Washington on Friday that uncertainty over the trade policies of the incoming administration is contributing to global economic challenges and ‘is actually expressed globally through higher long-term interest rates.’ She described that as a ‘very unusual’ combination, occurring at the same time that short-term rates have decreased.
Trump pledged to impose tariffs on enemies
Trump, who will take office on January 20, has pledged to impose new tariffs on imports from both allies like Canada and Mexico and enemies like China, sparking worries that supply-chain disruption will impede economic growth and drive up prices.
In October, Pierre-Olivier Gourinchas, the chief economist at the IMF, issued a warning that trade uncertainty and tariffs could cut global output by roughly 0.5 per cent.
Federal Reserve can afford to wait further to cut interest rate
The strength of the dollar ‘may contribute to increased financing costs for emerging-market economies, particularly low-income nations,’ Georgieva stated. According to her, the Federal Reserve ‘can afford to wait for more data before making further cuts’ to its benchmark interest rate, as evidenced by US economic data, including Friday’s spectacular jobs report.
The IMF has been warning about the global economy’s mediocre growth prospects ever since the pandemic. It projected a 3.2 per cent growth this year in October; this prediction is scheduled to be updated on January 17th when the fund releases an update of its World Economic Outlook.
