Economy & BudgetImportant2025-01-16

IMF Releases World Economic Outlook Update

Q: Which of the following statements is/are correct regarding the World Economic Outlook? 1. It is a flagship report published by the World Bank. 2. The January 2025 update projected India's economic growth at 6.5 percent for 2025 and 2026.

2 only — Statement 1 is incorrect because the World Economic Outlook is published by the International Monetary Fund (IMF), not the World Bank. Statement 2 is correct as the January 2025 update maintained India's growth forecast at 6.5 percent for both 2025 and 2026.

In News

What Happened

On January 16, 2025, the International Monetary Fund (IMF) released the January update of its World Economic Outlook (WEO) report. The report projected global economic growth to remain steady at 3.3 percent in both 2025 and 2026. It also reaffirmed India's status as the fastest-growing major economy globally. India's growth forecast was maintained at a robust 6.5 percent for both 2025 and 2026.

Why It Matters

Consistent high growth projections reinforce investor confidence in the Indian economy amid global geopolitical uncertainties. It highlights India's macroeconomic stability and positions the country as a primary driver of global economic expansion over the coming years.

Background

History & Context

The World Economic Outlook is a flagship report published by the IMF, typically released in April and October, with updates in January and July. The IMF, established in 1944 at the Bretton Woods Conference, monitors global economic health to prevent crises and ensure international monetary stability. In recent years, WEO reports have focused heavily on post-pandemic recovery, central bank rate cycles, and global trade fragmentation. India has consistently outpaced other major economies in these projections since the initial pandemic recovery phase.

What Changed

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BEFORE: There were lingering concerns about global economic volatility due to shifting central bank policies and persistent inflation. NOW: The IMF January 2025 update projects a steady global growth rate of 3.3 percent for both 2025 and 2026, signaling stabilization.
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BEFORE: Some analysts worried that domestic consumption issues and global headwinds might significantly drag down India's economic growth. NOW: The IMF maintained a robust 6.5 percent forecast for India in 2025 and 2026, defying slowdown fears.
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BEFORE: China and India were frequently grouped together with comparable high-growth trajectories in emerging market forecasts. NOW: The report definitively distances India's performance, cementing its position as the fastest-growing major economy while competitors face structural slowdowns.

Prelims Angle

NCERT Connection

This event connects to Class 12 Macroeconomics Chapter 6 - Open Economy Macroeconomics. The chapter explores how domestic economies interact with the rest of the world through trade and capital flows, concepts directly influenced by the global growth and inflation trends analyzed in the IMF World Economic Outlook.

Practice Questions

Q1

Correct Statement(s)

Which of the following statements is/are correct regarding the World Economic Outlook? 1. It is a flagship report published by the World Bank. 2. The January 2025 update projected India's economic growth at 6.5 percent for 2025 and 2026.

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