WORLD ECONOMIC OUTLOOK (WEO)

  • The IMF’s World Economic Outlook (WEO) – April 2025 projects that India will surpass Japan to become the 4th-largest economy in the world in 2025.
  • India’s nominal GDP is projected at USD 4.187 trillion, slightly ahead of Japan’s USD 4.186 trillion.

About the World Economic Outlook (WEO)

  • Published twice a year (April & October) by IMF.
  • Provides:
    • Global and regional economic forecasts
    • Inflation and financial risk insights
    • Policy recommendations for member countries
  • Crucial for policymakers, investors, researchers.

Key Highlights of the World Economic Outlook Report 2025

Global Outlook:

  • Global GDP Growth Forecast:
    • 2025: Revised downward to 8%
    • 2026: Projected at 0%
  • US Growth: Slows to 8% due to policy uncertainty and trade tensions.
  • Emerging Markets: Growth projected at 7% in 2025 – higher than global average.
  • Global Inflation: Easing gradually but remains vulnerable to trade and financial market volatility.

Demographic Shifts:

  • Global Aging Trend:
    • Average global age to increase by 11 years between 2020 and 2100.
    • Shift from demographic dividend to demographic drag.
  • Healthy Aging Benefits:
    • A 70-year-old in 2022 equals cognitive ability of a 53-year-old in 2000.
    • Healthy aging expected to add 4% to global GDP growth (2025–2050).

India-Specific Highlights

Growth Performance:

  • 2025 GDP Growth Forecast: Revised from 5% to 6.2%, still the fastest-growing major economy.
  • India outpaces China, whose forecast is reduced to 4.0% (from 4.6%).

Growth Drivers:

  • Private Consumption:
    • Strong in rural areas, driving domestic demand.
    • Nearly doubled to ₹1.83 lakh crore in 2024.
    • Growing at 2% CAGR, ahead of US, China, Germany.
  • Per Capita Income: Projected to exceed ₹3.49 lakh by 2030.
  • Middle-Class Expansion: People earning over ₹8.73 lakh annually to nearly triple by 2030.

Key Drivers of India’s Economic Resilience

1. Private Consumption

  • Core strength of India’s growth.
  • Set to become 3rd-largest consumer market by 2026.

2. Strong Macroeconomic Fundamentals

  • Debt-to-GDP ratio (FY25): India at 8% vs. US at 124.0%.
  • Supported by fiscal prudence and structural reforms.

3. Infrastructure & Digital Economy

  • Major schemes: Bharatmala, Sagarmala, Smart Cities Mission.
  • Digital economy contribution:74% of GDP (2022–23).

4. Government Reforms

  • Jan Dhan Yojana: Boosts financial inclusion.
  • PLI & Make in India: Promotes manufacturing and exports.

5. Demographics and Labor Force

  • Workforce to grow by 89 million by 2028.
  • Female labor participation increased from 23.3% (2017-18) to 7% (2023–24).

6. Technological Innovation

  • Rapid adoption of AI, green energy, digital platforms.
  • Startups projected to create 50 million jobs and add $1 trillion by FY30.
  • Tech sector to reach $300–350 billion by 2030.

7. External Demand & Trade Diversification

  • India’s share in global services exports: Rose from 9% (2005) to 4.3% (2023).
  • Deeper integration into global value chains and trade pacts.

India’s economic trajectory remains strong amid global uncertainties. Growth is underpinned by:

  • Consumption-led demand
  • Strategic reforms
  • Technological adaptation
  • Demographic advantage

Positioned to play a pivotal role in the global economy, as it rises to 4th-largest globally in 2025.

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