Global Economic Outlook and India's Position

Kristalina Georgieva, the International Monetary Fund (IMF) managing director, highlighted the global economic landscape, noting a 'little weaker' outlook for India by 2025. This projection comes amidst significant uncertainties, particularly surrounding US trade policies.

Regional Divergence in Growth: Georgieva pointed out that while the US economy outperforms expectations, the EU is experiencing a stall, and India faces a slight slowdown. She emphasized the deflationary pressures in China and the ongoing challenges with domestic demand.

Challenges for Low-Income Countries

Low-income countries, despite their efforts, remain vulnerable to negative impacts from any new shocks, as per Georgieva's observations. The global economy is bracing for a year filled with policy uncertainties, especially concerning the US's approach to tariffs, taxes, deregulation, and government efficiency.

India's Economic Forecast

India's economic growth is expected to decelerate to a four-year low in 2024-25, attributed to a moderation in manufacturing and sluggish investment. However, the robust growth in the agricultural sector is anticipated to support rural consumption and provide some economic buoyancy.

The National Statistics Office (NSO) has released the first advance estimates for the current financial year, projecting a GDP growth of 6.4%, a significant drop from the 8.2% growth recorded in 2023-24. The finance ministry has identified a combination of monetary policy stance, macroprudential measures by the central bank, and structural factors as contributors to the slowdown. All eyes are now on the upcoming Budget for measures to stimulate demand and foster growth amidst global uncertainties and geopolitical tensions.