On October 15, 2025, the International Monetary Fund (IMF) delivered a cautiously optimistic outlook for the global economy, raising its 2025 growth forecast for the United States to 2%. This upward revision, as reported by the IMF, comes in the midst of ongoing trade tensions and tariffs imposed by the Trump administration. Despite the persistent uncertainty these measures have generated, both the U.S. and global economies have demonstrated a surprising degree of resilience. The IMF now expects global economic growth to reach 3.2% in 2025, a modest improvement that reflects the adaptability of businesses and the cushioning effect of targeted trade exemptions.
But what’s really driving this resilience in the face of such headwinds? According to the IMF, a significant factor has been the surge in investments in artificial intelligence (AI), particularly in data centers and advanced computing. These investments have not only provided a much-needed boost to the U.S. economy but have also helped offset some of the negative impacts of tariffs. However, the IMF was quick to caution that this apparent strength may be masking deeper vulnerabilities. "This temporary resilience masks underlying economic vulnerabilities," the IMF emphasized, urging policymakers and businesses alike to remain vigilant as global trade challenges persist.
AI’s role in bolstering economic growth cannot be understated. The rapid expansion of data centers and the race to develop more sophisticated AI tools have attracted billions in private and public investment. While this has spurred job creation in some sectors, the overall hiring pace has slowed. Companies remain wary, adopting a cautious approach to expansion and recruitment amid the ongoing trade disputes. The IMF noted that while importers and retailers have so far absorbed most of the tariff costs, there is a looming risk that these costs will eventually be passed on to consumers, potentially stoking inflationary pressures.
Indeed, inflation remains a key concern. Core inflation in the U.S. has risen to 2.9%, according to the IMF’s latest assessment. This uptick is partly attributable to the knock-on effects of tariffs and supply chain adjustments, as well as the increased costs associated with new technology investments. The IMF also warned of the potential for a tech market bubble, given the frenzied pace of AI-related spending. While these investments are currently fueling growth, a sudden correction could expose the economy’s underlying fragilities.
Meanwhile, on the other side of the globe, India’s export sector has managed to weather its own set of challenges. Despite a hefty 50% extra tariff on its exports to the U.S. that took effect in late August 2025, India’s merchandise exports grew by 6.74% year-on-year in September, reaching $36.38 billion. This performance, reported by Indian commerce officials, defied expectations and was driven by a combination of factors: a weak base from the previous year, a pick-up in other markets, and standout performances in sectors like electronics.
However, the story isn’t entirely rosy. Exports to the U.S. fell sharply in September, dropping 21% to $5.43 billion from $6.87 billion in August. Much of the September growth can be attributed to front-loading—Indian exporters rushed shipments out before the new tariffs took effect. Still, over the April-September period, exports to the U.S. rose 13.35% to $45.82 billion, a testament to the resilience and adaptability of Indian industry. As Commerce Secretary Rajesh Agrawal put it, "This indicates that our industry has been resilient. They have been able to expand trade with the US by maintaining their supply chains, maintaining their business relations. They may have taken on some cost losses but maintained those supply chains."
It’s worth noting that around 55% of India’s export basket to the U.S. is now subject to the 50% duties, while the remainder faces tariffs similar to those applied to other trading partners. The impact of these duties varies by sector. Electronics exports soared 50.54% to $3.11 billion in September, while petroleum product exports climbed 15.22% to $4.95 billion, and rice exports rose by 33.18% to $924.88 million. Even marine product exports, which were expected to suffer the most from the U.S. tariff hike, grew by 23.44% to $781 million. The engineering sector, heavily exposed to the U.S. market, managed a 2.93% increase to $10.11 billion. Gems and jewellery exports remained flat, while readymade garment exports and cotton yarn and handloom products saw notable declines.
Agrawal explained, "There have been developments across the world which have impacted trade, developments across supply chains, developments across markets which have been impacting trade. In all this turbulence exports of goods and services have done well in the first six months of 2025-26." This turbulence is reflected in India’s import figures as well. Imports surged by 16.66% in September to $69.53 billion, driven largely by gold, silver, electronics, and machinery. Gold imports more than doubled to $9.61 billion, and silver imports skyrocketed by 139% to $1.3 billion, fueled by festive demand and rising prices. Electronics and machinery imports also posted strong growth.
Not all sectors have fared equally well. Services exports in India fell by 5.5% to $30.82 billion in September, while imports of services decreased by 7.6% to $15.29 billion. For the April-September period, merchandise exports were up 3.02% to $220.12 billion, and imports grew by 4.53% to $365.11 billion. Services exports for the first six months of the fiscal year increased by 6.12% to $193.18 billion, while imports edged down slightly.
Back in the U.S., the IMF’s report underscores that while the current economic climate appears stable, it is underpinned by a delicate balance. Trade exemptions and supply chain adaptations have helped limit the damage from tariffs, but risks remain. The specter of rising inflation, a possible technology-driven market bubble, and the eventual passing of tariff costs to consumers all threaten to upset this equilibrium. The IMF’s message is clear: continued vigilance is essential as the world navigates an increasingly complex trade landscape.
For both the U.S. and India, the story of 2025 is one of adaptation in the face of adversity. While headline growth figures offer grounds for cautious optimism, the underlying challenges are far from resolved. As global trade patterns continue to shift and new technologies reshape the economic landscape, policymakers and businesses alike will need to stay nimble, alert, and ready for whatever comes next.
