The Wire Staff 
New Delhi: The Economic Survey of India in July 2024 first confirmed the slowing down of the economy by projecting a growth rate of 6.5-7%. Then, earlier this week, the official acknowledgement was confirmed by the National Statistics Office (NSO), lowering the projection to 6.4% from 8.2% in 2023-24.
Inflation and rupee depreciation add to woes
And now, as people reel under the pressure of back-breaking inflation and feel squeezed by the fall of the rupee against the US dollar, the IMF managing director Kristalina Georgieva further confirmed the official estimates and said that the Indian economy is expected to be a “little weaker” in 2025, even as she expected an overall steady global growth rate but with a “regional divergence.”
“The US is doing quite a bit better than we expected before, the EU is somewhat stalling, (and) India a little weaker,” she said at her annual media round-table with a group of reporters on Friday, January 10.
Regional variations in economic recovery
She added that Brazil, too, is likely to face somewhat higher inflation while China was seeing deflationary pressure and challenges surrounding its domestic demand.
“Low-income countries, despite all the efforts they are making, are in a position when any new shock can affect them quite negatively,” Georgieva said.
US policies add to uncertainty
“What we expect in 2025 is to have quite a lot of uncertainty, especially in terms of economic policies. Not surprisingly, given the size and role of the US economy, there is keen interest globally in the policy directions of the incoming administration, in particular on tariffs, taxes, deregulation and government efficiency,” she added.
Donald Trump, who will be sworn in as the 46th US president on January 20, has already announced plans to impose additional tariffs on China, Canada and Mexico.
Higher interest rates remain a concern
“This uncertainty is particularly high around the path for trade policy going forward, adding to the headwinds facing the global economy, especially for countries and regions that are more integrated in global supply chains, medium-sized economies, (and) Asia as a region,” Georgieva noted, adding that the precariousness will be expressed globally through higher long-term interest rates despite declining short-term interest rates.
“As we all recognise, the higher interest rates that were necessary to fight inflation did not push the world economy into recession. They have delivered the desired results. Headline inflation is converging back to target sooner in advanced economies than in emerging markets,” she said.