IMF World Economic Outlook (October 2025): Global Economy Slows Down Amid Trade Wars, But India is Still Growing Strong
SDG 8: Decent Work and Economic Growth | SDG 17: Partnerships for the Goals
Institutions: Ministry of Finance | Reserve Bank of India (RBI)
The IMF’s World Economic Outlook October 2025 report delivers a sober warning: the global economy is slowing down because of rising trade protectionism and policy uncertainty. Global growth is projected to ease from 3.3% in 2024 to 3.2% in 2025. Any economic boost seen earlier in 2025 was temporary, caused by companies rushing to trade goods before new tariffs took full effect (called front-loading). Now that this temporary effect is fading, the economic outlook looks dimmer.
Crucially, India is a major bright spot, projected to grow at 6.6% in 2025. The IMF attributes India’s resilience to its strong domestic economy, stable food prices, and recent structural reforms, making it one of the few large economies with steady public finances. In contrast, advanced economies are only expected to grow around 121 percent in 2025-2026.
Key Findings:
The Global Picture is Slowing: The world economy is not growing as fast as it did before the pandemic, mainly due to new trade barriers.
Trade is Fragmenting: Increased tariffs and “buy local” rules are causing global trade to slow dramatically, with World Trade Volume growth expected at 2.9% in 2025-26.
Major Risks (What Could Make Things Worse): The biggest threats are the trade wars escalating further, the sharp drop in new immigrants entering key economies (reducing the workforce), and a sudden crash in the value of technology stocks (ending the AI investment boom).
India’s Advantage: India’s economy is largely driven by its own strong internal demand, robust services sector, and policy discipline, making it better insulated from external trade shocks.
The report provides an urgent mandate for policymakers to reduce uncertainty. The IMF explicitly calls for reforms that stabilize national finances, protect the independence of institutions like the RBI, and, for countries like India, prioritize structural reforms in labor mobility and digitalization to ensure long-term, high-quality growth.
What is “Front-Loading” in the context of global trade? → “Front-loading” occurs when companies rush to buy, sell, or ship goods ahead of an anticipated event, such as the announcement or implementation of new tariffs or taxes. In early 2025, many firms accelerated trade and investment activities to get ahead of the newly introduced tariffs, creating a temporary, artificial boom in global activity. As this wave of activity settles down, the underlying economic weaknesses caused by the tariffs become more noticeable.
What is the World Economic Outlook? → The World Economic Outlook is the IMF’s flagship biannual report on global growth, inflation, trade, and policy priorities. It sets baselines, risks, and scenarios that inform macroeconomic and financial decisions worldwide.
Follow the full report here: https://www.imf.org/en/Publications/WEO/Issues/2025/10/14/world-economic-outlook-october-2025