IMF maintains optimistic growth outlook for India

The IMF’s latest World Economic Outlook projects India’s GDP to grow 7% in FY 2024-25 and 6.5% in FY 2025-26, citing the economy reconnecting with its potential as pandemic-driven demand fades. The report highlights steady global growth at 3.2%, rising US growth forecasts, and trimmed projections for China.

The International Monetary Fund (IMF) on Tuesday maintained its growth projections for India in the latest World Economic Outlook (WEO). It forecasts India to grow at 7% in the current fiscal year ending March 31, 2025, and at 6.5% in FY2025-26.

“In India, the outlook is for GDP growth to moderate from 8.2% in 2023 to 7% in 2024 and 6.5% in 2025, because pent-up demand accumulated during the pandemic has been exhausted, as the economy reconnects with its potential,” the WEO stated.

Beyond the short-term forecast, the IMF warned of sluggish global economic growth in the medium term and called for structural reforms during the annual meetings of the IMF and World Bank in Washington.

The IMF raised the 2024 growth forecast for the US to 2.8%, up from 2.6% in July, while projecting 2025 growth at 2.2%, an increase from 1.9%. Global growth estimates remained steady at 3.2% for both 2024 and 2025. China’s growth forecast was trimmed to 4.8% for 2024, down from 5%, while its 2025 forecast stayed at 4.5%.

The WEO presented a mixed outlook for the global economy, expressing optimism over inflation control but raising concerns about debt levels, geopolitical instability, and trade tensions. It noted that ongoing conflicts in the Middle East could disrupt commodity markets and trade in the region.

“It looks like the global battle against inflation has largely been won, even if price pressures persist in some countries,” IMF chief economist Pierre-Olivier Gourinchas said. He added, “Strong growth forecast has come along with progress on inflation” in the US and highlighted the role of productivity, stating, “There is strong productivity growth when we look at the US.”