International Monetary Fund (IMF) Managing Director Kristalina Georgieva has cautioned that the growing resort to tariffs by some of the world’s major economies threatens global trade and could slow growth in emerging markets, including India.
While she observed that a handful of countries are turning to protectionist measures, she noted that "most nations continue to support open and fair trade, a path … vital for sustained global progress."
nternational Monetary Fund (IMF) Managing Director Kristalina Georgieva singled out India as an exception among emerging economies, asserting that the country’s steady reform drive has enabled it to weather global uncertainties. “India is where it is today because it has pursued very significant reforms — tax reform, investment in infrastructure, both digital and physical, improving connectivity across the country.
That has injected this growth potential,” she remarked. She added that India’s emphasis on long-term development through tax, infrastructure and digital connectivity reforms has helped it preserve strong growth momentum.
Georgieva pointed out that the largest economy in the world has chosen to use tariffs as an instrument in its relations with partners. However, she added, “The rest of the world has not followed — at least not yet.” She noted that out of 191 IMF member countries, only three — the United States, China, and to some extent Canada — have made forceful moves toward tariff escalation. She said, “The other 188 have said, ‘Thank you, but no thank you,’ and have chosen to continue trading under most-favoured-nation rules.”
Emphasizing the structural risks, she warned, “Unless you are a very large and relatively closed economy — and India is not — protectionism doesn’t work well for you. India is an open economy, and remaining open, competitive, and reform-driven is the best way forward.” She urged India to sustain broad geopolitical relations and maintain openness toward trade if it is to benefit from global integration in the long term.
The IMF recently raised India’s growth forecast for the fiscal year 2025–26 by 0.2 percentage points, placing it at 6.6 percent. This upward revision reflects robust domestic demand, ongoing structural reforms, and the carryover momentum from the first quarter.
In the April–June quarter, India’s economy expanded by 7.8 percent, driven largely by private consumption and investment — a performance that helped the country retain the title of the world’s fastest-growing major economy, despite headwinds from rising U.S. import tariffs.
While higher tariffs by the U.S. have created headwinds for Indian exports, the IMF believes that India’s internal strength — its large consumer base, reform momentum, and policy discipline — will help cushion the impact.
Georgieva emphasized that for countries like India, leveraging “broad geopolitical relationships and an open stance toward trade” is essential to derive maximum benefit from global integration.
Her warnings signal broader risks: as protectionism rises, emerging markets that depend heavily on trade and foreign investment may find themselves squeezed. Unless industrialised nations reverse course, growth in many developing economies could decelerate.
The IMF has also reiterated that rising trade barriers, as well as geopolitical tensions, are among the principal threats to global growth. Even as some economies are now showing resilience, the lagging impacts of tariffs may dampen global trade flows and investment.
IMF Chief Kristalina Georgieva’s message is clear: in an era where tariffs and trade barriers are rising, open trade remains the lifeline for growth, especially for open economies like India. Her praise for India’s reform agenda — in taxation, infrastructure, and digital connectivity — underscores how structural measures can fortify an economy against external headwinds.
With the IMF now projecting India’s growth at 6.6 percent for 2025–26, the outlook is optimistic. Yet the path ahead is not without risk. For India to maintain its growth trajectory, it must remain open, continue innovating, deepen international trade partnerships, and resist pressures to retreat into protectionism. In a fracturing global landscape, the ability to stay connected, competitive, and reform-driven might well determine who leads the next chapter of global growth.