IMF raises India’s growth forecast to 6.7% from 6.3% for FY24

Bengaluru: The International Monetary Fund (IMF), on Tuesday raised India’s gross domestic product (GDP) growth forecast for the current financial year (FY24) to 6.7 per cent from 6.3 per cent, and for the next year (FY25) to 6.5 per cent from 6.3 per cent, primarily on back of what it said was ‘the resilience in domestic demand’. Growth forecast for FY26 was also raised to 6.5 per cent.

In its latest World Economic Outlook (WEO) report, the IMF also raised global economic growth forecast to 3.1per cent from 3 per cent for calendar year 2024, and 3.1per cent from 2.9 per cent for 2025. Forecasts were raised for almost all major economies including United States, China and Eurozone.

“Growth in India is projected to remain strong at 6.5 per cent in both FY25 and FY26, with an upgrade from October of 0.2 percentage point for both years, reflecting resilience in domestic demand,” the WEO report stated.

The IMF’s latest GDP growth revision is still lower than what many other agencies are projecting. The National Statistical Office projects India’s FY24 GDP growth at 7.3 per cent as per the first advance estimates, and the Reserve Bank of India Governor Shaktikanta Das said earlier this month that growth in FY25 could be around 7 per cent.

For the world economy, the IMF said that with disinflation and steady growth, the likelihood of a hard landing has receded, and risks to global growth are broadly balanced. “On the upside, faster disinflation could lead to further easing of financial conditions,” the IMF said.

“Inflation is falling faster than expected in most regions, in the midst of unwinding supply-side issues and restrictive monetary policy. Global headline inflation is expected to fall to 5.8 per cent in 2024 and to 4.4 per cent in 2025,” the IMF said.

The report stated that policymakers’ near-term challenge is to successfully manage the final descent of inflation to target, calibrating monetary policy in response to underlying inflation dynamics and—where wage and price pressures are clearly dissipating—adjusting to a less restrictive stance.

“At the same time, in many cases, with inflation declining and economies better able to absorb effects of fiscal tightening, a renewed focus on fiscal consolidation to rebuild budgetary capacity to deal with future shocks, raise revenue for new spending priorities, and curb the rise of public debt is needed,” it said.