International Monetary Fund (IMF) on Tuesday raised India’s growth projection for FY25 by 20 basis points to 7% citing ‘improved prospects’ for private consumption, particularly in rural areas.
It expects gross domestic product (GDP) growth in FY26 to slow down to 6.5%, same as projected in its April World Economic Outlook (WEO).
“The forecast for growth in India has also been revised upward, to 7%, this year, with the change reflecting carryover from upward revisions to growth in 2023 and improved prospects for private consumption, particularly inrural areas,” it said.
On a calendar-year basis, India’s growth projections are 7.3% in 2024 and 6.5% in 2025.
IMF chief economist Pierre-Olivier Gourinchas said that Asia’s emerging market economies remain the main engine for the global economy.
Recently, the Reserve Bank of India (RBI) has projected the economy will grow at 7.2% in FY25. Governor Shaktikanta Das said India is at the threshold of a major structural shift in its growth trajectory.
The IMF report upgraded the growth forecast for China for the calendar year 2024 by 40 basis points to 5% on account of a rebound in private consumption and strong exports in the first quarter.
Gourinchas in a blog post said, “Growth in India and China is revised upwards and accounts for almost half of global growth. Yet prospects for the next five years remain weak, largely because of waning momentum in emerging Asia.”
IMF’s global growth projections are unchanged at 3.2% for the calendar year 2024 and slightly higher at 3.3% in 2025. It predicted the global inflation to slow to 5.9% in 2024 from 6.7% last year, broadly on track for a soft landing.
“The good news is that, as headline shocks receded, inflation came down without a recession. The bad news is that energy and food price inflation are now almost back to pre-pandemic levels in many countries, while overall inflation is not,” said Gourinchas.
