IMF Raises Growth Projections
The International Monetary Fund (IMF) has revised its growth projections for India, painting a positive picture for the country's economic future. In its update to the World Economic Outlook (WEO), the IMF raised India's GDP growth projection for 2024-25 by 30 basis points to 6.8%. This upward revision is attributed to buoyant domestic demand and a rising working-age population.
The IMF expects India's economic growth to remain strong at 6.8% in 2024 (FY25) and 6.5% in 2025 (FY26). This robustness reflects the continuing strength in domestic demand and a rising working-age population. The IMF's projection for FY24 is 7.8%, compared to 6.7% in its January report. For FY26, the IMF expects the country's economic growth to slow down slightly to 6.5%.
This positive outlook is further supported by the second advance estimates by the National Statistical Office, which estimated the growth rate of GDP during 2023-24 at 7.6%, compared to a growth rate of 7% in 2022-23. Rating agencies, including Fitch and Barclays, have also revised India's GDP growth projection for FY24 to 7.8% due to strong domestic demand and persistent growth in business and consumer confidence levels.
On the inflation front, the IMF projected India's consumer price inflation declining from an average of 5.4% in FY24 to 4.6% in FY25, and further to 4.2% in FY26. This indicates a gradual easing of inflationary pressures in the coming years.
The IMF's report also highlights the global economic landscape, noting that despite gloomy predictions, the world avoided a recession. The banking system proved largely resilient, and major emerging market economies did not suffer sudden stops. However, the report warns that medium-term growth prospects remain historically weak, and there is a need for huge global investments for a green and climate-resilient future.