Tariffs won’t hurt India, this IMF report is a slap in the face for Trump.
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The US President’s attempt to pressure India with tariffs has been thwarted by the International Monetary Fund’s latest World Economic Outlook (WEO) report. The report states that US tariffs are unlikely to have a significant impact on the Indian economy. According to the report, India will remain among the world’s fastest-growing major economies until 2025–26. India’s growth will continue to exceed China’s in the current fiscal year. The IMF projects China’s growth rate to be 4.8 percent in 2025–26.
The IMF has also raised India’s GDP growth forecast. According to the report, India’s GDP is expected to grow at a rate of 6.6 percent in the current fiscal year. The IMF report came after market hours on Friday. Its impact may be seen in the next session. Positive news on GDP growth will further strengthen sentiment.
India has weathered the tariff shock
According to the report, the strong growth of the domestic economy in the first quarter has largely offset the impact of tariffs. While there were fears of a sharp economic slowdown after the US increased tariffs on Indian and Chinese goods, the IMF believes the actual damage was limited. Strong domestic consumption, manufacturing activity, and increased private investment in India largely cushioned the blow. The IMF noted that “the effects of tariffs were less severe than expected, with resilient domestic demand and trade diversification being key factors.”
India will outperform China
According to the new projections, India will outperform China, which the IMF projected to grow at 4.8 percent. The IMF attributes India’s strength to strong domestic consumption, improved manufacturing, and an expansion in the services sector. However, the IMF has lowered India’s 2026 growth forecast to 6.2 percent. According to the Fund, the initial upturn may not be sustainable. India’s economy grew at 6.5 percent in FY25 and remains within the government’s 6.3–6.8 percent range for FY26. This growth is happening at a time when uncertainty is increasing across the world.
