'Key growth engine': IMF hails India's economy; downplays Trump tariff impact

International Monetary Fund (IMF) Managing Director Kristalina Georgieva has hailed India as a “key growth engine” of the global economy. Her remarks come as the global economy is battling trade tariffs imposed by US President Donald Trump on April 2.

“Global growth patterns have been changing over the years, notably with China decelerating steadily while India develops into a key growth engine,” Georgieva said ahead of next week’s IMF and World Bank annual meetings in Washington.



Speaking at the Milken Institute, Georgieva said the global economy is “doing better than feared, but worse than we need.” She noted that growth is expected to slow “only slightly this year and next,” supported by stronger-than-expected performance in the United States and key emerging economies, including India.

“All signs point to a world economy that has generally withstood acute strains from multiple shocks,” she said, citing “improved policy fundamentals,” the adaptability of the private sector, and “lower-than-expected tariffs.”

"The world has avoided a tit-for-tat slide into trade war -- so far," she added.

The IMF chief’s comments come amid heightened global uncertainty after US President Donald Trump imposed sweeping tariffs, including a 50 per cent levy on Indian imports, half of which targets India’s discounted purchases of Russian oil. Washington has accused India and China of “funding” Moscow’s war effort, but New Delhi has maintained that its energy procurement is guided by national interest and market dynamics.

Georgieva, also appeared to downplay the immediate global fallout of Trump’s trade policies, saying the world has “avoided a tit-for-tat slide into trade war — so far.” She noted that the US tariff rate has fallen from 23 per cent in April to 17.5 per cent today, though the effective rate remains “far above the rest of the world.” Still, she warned, “The full effect of those tariffs is still to unfold. Global resilience has not yet been fully tested.”

Indian economy surges ahead

India has also downplayed the impact of 50% tariffs imposed by the United States.

Last week, Union finance minister Nirmala Sitharaman said that the economy continues to demonstrate resilience and sustainable growth, driven by strong domestic consumption and investment

“The Indian economy is resilient and continues to grow sustainably,” she stated, adding that external shocks would have limited impact on the country's growth trajectory.

Meanwhile, India recorded a robust 7.8% real GDP growth in Q1 of FY 2025–26, outperforming the RBI’s earlier estimate of 6.5%. The growth was supported by a revival in consumption and a recent reduction in GST rates.