Context : IMF’s Growth Projection
- India’s GDP growth for FY 2025–26 is projected at 6.2% by the IMF.
- This is 0.3 percentage points lower than the earlier estimate of 6.5%.
- The global growth forecast is also revised downward to 2.8%, a cut of 0.5 percentage points.
Relevance : GS 3(Indian Economy)
Stated Reasons for Revision
- Escalated global trade tensions have impacted investor confidence and export dynamics.
- Worsening global uncertainty, including geopolitical risks and financial market volatility.
- Tighter monetary conditions in advanced economies could be curbing capital flows and investment.
Implications for India
- Export sector vulnerability: India’s integration with global supply chains may suffer.
- Private investment slowdown: Uncertainty may delay new investments or expansion plans.
- Impact on job creation: Slower growth could restrict employment generation, especially in informal sectors.
Relative Positives
- Despite the downgrade, India remains among the fastest-growing major economies.
- Domestic demand and infrastructure push may partially offset external headwinds.
- Potential for policy response via fiscal support or targeted reforms if slowdown deepens.
Broader Global Context
- Similar downgrades for several emerging and developing economies.
- Global trade fragmentation and protectionist measures gaining ground.
- Need for multilateral cooperation to stabilize trade, finance, and supply chains.
