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Below the Quote on World Economic Outlook (WEO) - January 2025 by Dr. Manoranjan Sharma, Chief Economist, Infomerics Ratings

The IMF’s latest WEO released on January 17, 2025 makes sober reading. While the IMF maintained its global growth forecast unchanged at 3.3 % both in 2025 and 2026, global headline inflation is likely to decline to 4.2 % in 2025 and to 3.5 % in 2026. In this tumultuous time, adroit risk management “requires a keen policy focus on balancing trade-offs between inflation and real activity, rebuilding buffers, and lifting medium-term growth prospects through stepped-up structural reforms as well as stronger multilateral rules and cooperation”. Quite a tall order in view of President-elect Donald Trump’s accent on tariffs, a throwback to protectionism, currency volatility, checking inflationary impulses while shoring up growth. 

The WEO’s assessment “growth in India also slowed more than expected, led by a sharper-than-expected deceleration in industrial activity” causes a gnawing feeling. But given the global setting of “divergent and uncertain” growth and India’s consistent outperformance, there is no case for any alarm. 

It is also expected that the Union Budget on February 1, 2025 and the forthcoming Monetary Policy on February 7, 2025 will provide an impetus to the transformative growth process of the Indian economy and revive the animal spirits.

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