On July 29, 2025, the International Monetary Fund (IMF) released its latest update to the World Economic Outlook (WEO)— titled “Global Economy: Tenuous Resilience amid Persistent Uncertainty.”A key document that offers a detailed snapshot of how the global economy is performing and what lies ahead.

The global economy has gone through a very difficult time over the past few years. From the COVID-19 pandemic to the Russia-Ukraine war, and now rising trade tensions and high inflation, every country—big or small—has faced serious challenges. In this uncertain situation, the International Monetary Fund (IMF) has released its latest World Economic Outlook (WEO) in July 2025, which gives updated forecasts about how different economies are expected to perform in the next two years.

This report is important because it helps us understand not just the condition of the global economy, but also where India stands compared to other major countries like the US and China. The IMF has slightly increased its growth projections for both India and the world, showing signs of improvement—but also warning that the situation remains fragile and unpredictable.

Key Themes of the July 2025 Outlook

1. Growth Continues Despite Global Disruptions

According to the IMF, global growth is projected at 3.0% in 2025 and 3.1% in 2026. These figures represent a small upward revision from the earlier April 2025 forecast—an indication that the global economy has been more resilient than initially feared.

This resilience is particularly notable when we recall the severe disruptions since 2020:

• The COVID-19 pandemic broke global supply chains and triggered inflation.
• Governments ran massive budget deficits to support their economies, as tax revenues fell and emergency spending increased.
• The Russia-Ukraine war disrupted essential commodity supplies like food, fertilisers, and crude oil, causing price spikes.
• Global central banks were forced to raise interest rates sharply to control inflation, increasing the cost of borrowing worldwide.
• Trade tensions rose again in early 2025, particularly due to the second Trump administration in the US reintroducing tariffs on several imports.

2. Recovery Is Fragile and Uncertain

While growth continues, it remains fragile and uncertain. The IMF warns that the current outlook could easily deteriorate depending on a few critical factors:

• Trade wars may intensify. The US has proposed tariff hikes that, if implemented, could slow global growth significantly. For example, a proposed 50% tariff on copper could disrupt trade and investment in key sectors.
• Geopolitical tensions—particularly in the Middle East and Ukraine—remain unresolved. Any escalation could affect energy supplies and global logistics.
• Government debt levels are dangerously high, especially in advanced economies. The more governments borrow, the higher the interest rates, which in turn makes it harder for developing countries to access affordable finance.

India’s Growth Outlook and IMF Projections

Among all major economies, India remains the fastest-growing. The IMF has revised India’s GDP growth forecast upward to:

• 6.4% in 2025 and
• 6.4% in 2026 (based on the calendar year)

If measured by India’s financial year (April to March), the projected growth is even better:

• 6.7% in FY25 and
• 6.4% in FY26

This revision, compared to April’s forecast of 6.2% and 6.3% respectively, reflects growing confidence in India's economic momentum. The IMF attributes this to:

• A favourable external environment
• Stable domestic demand
• Effective macroeconomic policies

Although slower than the post-COVID high of 9.2% in 2023, India's growth is still impressive, especially in a global context where many advanced economies are growing at just 1–2%. This steady performance is helping India narrow the GDP gap with major developed countries.

US Economy: Slower Growth Ahead

The United States, the world’s largest economy, is projected to slow down in the coming years:

• 2.9% growth in 2023
• 2.8% in 2024
• 1.9% in 2025, falling further to 1.2% in 2026

Although the July 2025 forecast is slightly better than the April one (by 0.1%), the longer-term trend suggests a loss of momentum. One of the main reasons for this slowdown is policy uncertainty, especially around tariffs and trade.

The second Trump administration has proposed a series of protectionist measures. If fully implemented, these could work like a tax on global production—raising prices without increasing output. This would negatively affect the US and the world economy alike.

China’s Economic Performance and Forecast

China, the world’s second-largest economy, is forecast to grow at:

• 4.8% in 2025, up from the April forecast of 4.0%

This upward revision is significant, especially given concerns around China’s property sector and demographic slowdown. With a GDP of over $19 trillion, even modest growth translates into massive economic activity. Despite US-China tensions and internal challenges, China continues to play a central role in the global economy.

Europe and Japan: Low but Improving Growth

• Euro Area: Growth is projected at 1.0% in 2025, a slight improvement over past years.
• Germany, the largest European economy, remains sluggish with just 0.1% growth expected in 2025.
• United Kingdom: Expected to grow at 1.2%, showing modest progress.
• Japan: Projected to grow 0.7%, indicating slow but stable recovery.

Russia and Pakistan: Economic Outlook

• Russia, after strong growth in 2023 and 2024, is expected to slow down sharply to 0.9% in 2025. This suggests that the long-term effects of war, sanctions, and global isolation are beginning to weigh on its economy.
• Pakistan, on the other hand, is forecast to grow at 2.7% in 2025, up from negative growth in 2023. While this may suggest recovery, the growth is still modest given the country’s small GDP base of around $380 billion.

Major Risks Highlighted by the IMF

1. Rising Trade Barriers

If tariff wars escalate, global trade could be severely disrupted. The IMF warns that if tariff rates return to levels proposed in US policy letters (as high as 50% for some products), global growth could decline.

2. Geopolitical Conflicts

Conflicts in Ukraine, the Middle East, or other regions could damage global supply chains and push up commodity prices, affecting both producers and consumers worldwide.

3. Public Debt and Interest Rate Pressure

Many governments—especially in advanced economies—are borrowing far beyond sustainable levels. This increases interest rates globally, making it more expensive for developing countries to finance infrastructure and welfare projects.

Conclusion:

The IMF’s July 2025 update to the World Economic Outlook offers a cautiously optimistic message. The global economy has shown remarkable resilience but remains exposed to a wide range of risks. Trade tensions, geopolitical instability, and rising debt could reverse the gains seen in recent years.

In this uncertain global landscape, India stands out as a bright spot. With consistent growth above 6%, strong domestic demand, and sound policies, it is poised to play a larger role in the world economy. However, to sustain this momentum, India must continue to invest in infrastructure, improve ease of doing business, and remain vigilant about external shocks.

The next few years will be crucial—not just for India, but for the world—to build on this fragile recovery and work towards a more stable, inclusive, and sustainable global economy.