India & China Are Powering the World Now: IMF’s 2025 Outlook Signals a Big Shift

In a clear signal of how global economic power is shifting, the International Monetary Fund (IMF) has revised its global growth forecasts and made one thing evident: the world is increasingly reliant on India and China to keep the economic engine running. In its April 2025 World Economic Outlook, the IMF downgraded global GDP growth to 2.8%, a significant drop from its January estimate of 3.3%. While this slowdown is largely driven by rising geopolitical tensions and fresh trade barriers especially the re-escalation of the US–China tariƯ war the real headline is about who’s still growing. And the answer is clear: India and China.

The Eastward Shift in Growth Engines

India, now expected to grow at a solid 6.5% in 2025, is projected to contribute over 15% of all global economic output through 2030. That’s a sharp rise in its share and places it firmly as the second-largest driver of global growth. China, despite domestic challenges, still holds the top spot now set to account for 23% of total global expansion over the next five years.

The United States, by contrast, is seeing a decline in its relative contribution. The IMF now forecasts the US share of global growth at 11.3%, slightly down from its earlier projection of 11.6%. The numbers speak to a broader structural shift: global economic momentum is decisively moving from the West to the East.

What’s Fueling Asia’s Rise ?

The forces behind this shift are multi-dimensional. India’s economy is being powered not just by exports, but by strong domestic consumption, which now accounts for nearly 60% of its GDP. Additionally, largescale infrastructure investments in highways, railways, and logistics are laying the foundation for long-term expansion. Foreign investment has also picked up significantly, with FDI rising 19% year-onyear in Q1 2025, driven by sectors like electronics, green energy, and semiconductors.

China, on the other hand, is evolving its growth model. Despite its property sector woes, it is pushing hard into smart manufacturing, green energy, and AI. The government is also supporting local economies with targeted credit measures and sovereign bond issuances. While FDI into China grew at a slower pace (+4%), the focus is now on high-tech and domestic innovation.

Together, these two economies are not just recovering they’re redesigning the global growth map.

Trade Wars & Policy Shifts : The Global Context

Much of the IMF’s revision this year comes on the back of renewed trade friction. US President Donald Trump’s recent reintroduction of tariffs some broad-based, others more targeted has added volatility to global trade. While some of these measures have been temporarily paused, uncertainty remains high.

This uncertainty is pushing multinational corporations to diversify their supply chains, accelerating the “China+1” strategy that’s benefiting India and other Southeast Asian nations. Investors are also rotating capital away from the developed markets hit by high interest rates and slowing growth toward high potential emerging markets.

Investment Implications : What Should You Watch ?

For investors, the writing is on the wall. Capital flows are shifting eastward. Global mutual funds and ETFs are increasing exposure to Asia-Pacific, and particularly to India. With India’s inclusion in JP Morgan’s Emerging Market Bond Index now in effect, more long-term foreign capital is flowing into its debt markets.

Currency markets are reacting too. As the Dollar Index weakens, the Indian Rupee and Chinese Yuan are showing signs of strength. Meanwhile, commodity markets especially crude oil, copper, and steel are gaining traction thanks to increased infrastructure and energy demand from Asia.

Even on the oil front, India’s consumption story is becoming more prominent. Some analysts project that India may surpass the US in oil demand growth by the end of 2025, a milestone that would have been unthinkable a decade ago.

Can the IMF Forecasts Be Trusted ?

While the IMF remains the gold standard for macroeconomic projections, its track record with India and China has been mixed. In 2023, it significantly underestimated India’s growth, projecting just 6.1% when the actual figure turned out to be 7.2%. For China, the IMF has often been overly optimistic missing the slowdown in 2022, when actual growth came in at just 3% versus a forecast of 5.4%.

Still, even if the exact numbers shift, the trendline is unmistakable. The balance of global economic power is tilting east.

The Final Word: A New Global Order

The IMF’s latest outlook doesn’t just revise numbers it reflects a paradigm shift. As the West deals with economic fatigue, political polarization, and tighter financial conditions, Asia is taking the lead. India and China aren’t just catching up anymore they’re steering the wheel. For policymakers, investors, and business leaders alike, the message is clear: the future of global growth is being written in New Delhi and Beijing. And if you want to stay ahead, it’s time to look east.