The International Monetary Fund (IMF) has raised its forecast for India’s economic growth in the fiscal year 2024-25 to 6.8%, an increase of 30 basis points, attributing the adjustment to robust domestic demand. However, this figure remains slightly below the Indian government’s projection of 7% growth.
According to the latest update of the World Economic Outlook (WEO), the IMF anticipates strong growth momentum in India to continue, with an expectation of 6.5% in 2025-26. “Growth in India is projected to remain strong, reflecting continuing strength in domestic demand and a rising working-age population,” the IMF noted in its report.
For the fiscal year 2023-24, the IMF has adjusted India’s growth rate up to 7.8% from 6.7% as stated in its January report, aligning closely with revised estimates by rating agencies such as Fitch and Barclays, which also forecast a 7.8% growth due to robust consumer and business confidence.
The National Statistical Office’s second advance estimates had earlier pegged the GDP growth for 2023-24 at 7.6%. This performance marks a continuation of the strong economic trajectory from the previous year’s 7% growth rate.
The finance ministry remains optimistic about the fiscal year 2024, highlighting “strong growth accompanied by stable inflation and external account, and progressive employment outlook” in its February economic report. However, it also cautioned about potential challenges such as rising crude oil prices and global supply chain bottlenecks.
On the inflation front, the IMF projects a decrease in India’s consumer price inflation from an average of 5.4% in FY24 to 4.6% in FY25, and further to 4.2% in FY26.
Globally, the IMF has revised its 2024 growth projection upwards by 10 basis points to 3.2%, noting that while advanced economies might see slightly faster growth, emerging markets are expected to maintain stable growth with regional variations.
IMF Chief Economist Pierre-Olivier Gourinchas commented on the resilience of the global economy despite various challenges. “Despite many gloomy predictions, the world avoided a recession, the banking system proved largely resilient, and major emerging market economies did not suffer sudden stops,” Gourinchas stated.
For China, the IMF predicts a slowdown in GDP growth from 5.2% in 2023 to 4.6% in 2024 and 4.1% in 2025, influenced by easing post-pandemic consumption and persistent weaknesses in the property sector. However, Gourinchas indicated potential upward revisions to China’s growth forecasts following stronger-than-expected growth in the first quarter of 2024.
Addressing the broader global economic outlook, Gourinchas highlighted steady growth and slowing inflation but warned of significant challenges for low-income countries still recovering from the pandemic and cost-of-living crises. He emphasized the ongoing vulnerability to economic scarring in these regions.
Furthermore, the IMF report underlined that while the current inflation trends are promising, “we are not there yet,” and stressed the historical weakness in medium-term growth prospects globally. It also called for substantial global investments to secure a green and climate-resilient future.
This IMF report sets the stage for cautious optimism but underscores the need for vigilant economic management and strategic planning to address both immediate and long-term challenges across different global economies.
