IMF World Economic Outlook 2025: Key Insights for UPSC, SSC & Competitive Exams

IMF’s World Economic Outlook: What You Need to Know
Overview of the July 2025 Update
The WEO is the IMF’s flagship report, published twice yearly (April/October) with interim updates (January/July). The July 2025 update, titled “Global Economy: Tenuous Resilience amid Persistent Uncertainty,” highlights two realities:
Resilience: Despite shocks like the pandemic, Ukraine war, and U.S. tariff policies, the global economy continues to grow.
Fragility: Growth remains unstable due to unresolved geopolitical risks and policy ambiguities.


Global Growth Projections:
2025: 3.0% (revised up by 0.2% from April’s forecast).
2026: 3.1% (up 0.1%).


Key Risks Highlighted:
Trade policy uncertainty (e.g., U.S. tariffs).
Geopolitical conflicts (Middle East, Ukraine) disrupting supply chains and inflating commodity prices.

Country-Specific Growth Analysis
United States:
Growth momentum slows to 1.2% in 2026 (down from 2025).
GDP to reach ~$31 trillion by end-2025.
Policy uncertainty (e.g., tariffs) poses major risks.
China:
Projected growth: 4.8% in 2025 (marginal slowdown).
Maintains stability despite a $19+ trillion GDP base.
India:
Bright spot with 6.4% growth in 2025 – the fastest among major economies.
Outpaces rivals struggling to grow even at 2%.
Rapidly closing GDP gaps with developed nations.


About the International Monetary Fund (IMF)
Mission & Structure
Established in 1945, the IMF promotes global monetary cooperation among its 191 member countries. Its core goals:
Ensure financial stability and sustainable growth.
Encourage trade expansion.
Discourage harmful economic policies.


How the IMF Works:
Provides emergency funds (not project loans) to crisis-hit nations.
Uses Special Drawing Rights (SDRs), a basket currency (USD, EUR, CNY, JPY, GBP), for lending.


Governance:
Board of Governors:
Highest authority (1 governor per country, usually finance ministers/central bankers).
Delegates power to the Executive Board.
Executive Board:
25 Directors + Managing Director (Kristalina Georgieva since 2019).
Manages daily operations.


Key IMF Reports & Tools
Global Financial Stability Report (GFSR): Assesses financial system risks.
Special Drawing Rights (SDRs): Reserve assets for liquidity support.
Funding Sources: Member quotas (based on economic size) + multilateral loans.


Sample Q&A for Competitive Exams
Q: What is the theme of IMF’s July 2025 World Economic Outlook?
A: “Global Economy: Tenuous Resilience amid Persistent Uncertainty” – reflecting unstable growth amid geopolitical/trade risks.
Q: How does India’s 2025 growth projection compare globally?
A: At 6.4%, India is the fastest-growing major economy, outpacing the global average (3.0%).
Q: What are SDRs? How does the IMF use them?
A: Special Drawing Rights (SDRs) are IMF’s reserve assets (a basket of 5 currencies). The IMF lends SDRs to countries facing balance-of-payments crises.
Q: Identify two risks to global growth per IMF’s WEO.
A: (i) Trade policy uncertainty (e.g., U.S. tariffs), (ii) Geopolitical conflicts (Middle East/Ukraine).
Q: Who chairs the IMF Executive Board?
A: Managing Director Kristalina Georgieva (since 2019; re-elected in 2024).


Why This Matters for Your Exam
UPSC Relevance: IMF reports, SDRs, and global growth trends are hot topics in Prelims and Mains (GS Paper III).
Key Focus Areas:
IMF’s role in crisis management vs. development banks (like World Bank).
Impact of geopolitical risks on supply chains.
India’s economic resilience in a volatile world.
Pro Tip: Use the sample questions to test your knowledge. Revise terms like SDRs, quota system, and GFSR for high marks!