Increase in Growth Forecast
The International Monetary Fund (IMF) raised its projection of growth in India’s gross domestic product (GDP) for 2024-25 by 20 basis points to 7 percent. This adjustment is attributed to a boost in private consumption, particularly in rural areas.
Growth Projections Overview
The IMF’s update to the World Economic Outlook (WEO) noted:
“The forecast for growth in India has … been revised upward … with the change reflecting carryover from upward revisions to growth in 2023 …”
For 2025-26, the IMF expects growth to slow to 6.5 percent, which is consistent with its April WEO projection.
Past Performance
In 2023-24, India’s GDP expanded at 8.2 percent, surpassing the 7 percent growth rate of 2022-23. This increase was driven by an unexpected expansion of 7.8 percent in the fourth quarter, according to the provisional estimates released by the National Statistical Office (NSO).
Robust Expectations from Various Institutions
FY25 Growth Projections (in % Y-o-Y)
| Institution | Earlier | Revised |
|---|---|---|
| World Bank | 8.0 | 7.2 |
| Fitch | 6.6 | 6.6 |
| ADB | 7.0 | 7.2 |
| OECD | 6.7 | 7.0 |
| Standard Chartered | 6.2 | 6.6 |
| IMF | 6.8 | 7.0 |
| RBI | 7.0 | 7.2 |
| SBI | 6.3 | 7.0 |
Insights from RBI
The Reserve Bank of India (RBI) has projected the Indian economy to grow at 7.2 percent in FY25. RBI Governor Shaktikanta Das highlighted that India is on the verge of a “major structural shift” in its growth trajectory, with potential for sustained 8 percent GDP growth annually over the longer term.
Global Outlook and China’s Forecast
The IMF also increased China’s growth forecast for 2024 by 40 basis points to 5 percent, citing a rebound in private consumption and strong exports in the first quarter. On a calendar-year basis, India’s growth projections stand at 7.3 percent for 2024 and 6.5 percent for 2025.
IMF Chief Economist’s Perspective
Pierre-Olivier Gourinchas, IMF Chief Economist, emphasized the significance of Asia’s emerging market economies, noting:
“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.”
The IMF’s global growth projections remain unchanged at 3.2 percent for 2024, with a slight increase to 3.3 percent in 2025. The organization also predicts a decrease in the global inflation rate to 5.9 percent in 2024 from 6.7 percent in the previous year, suggesting a soft landing is on track.
Inflation Insights
Gourinchas added:
“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.”
International Monetary Fund
The International Monetary Fund (IMF) is a global financial organization established in 1945 to promote economic stability and growth. Headquartered at 700 19th St NW, Washington, DC 20431, United States, it includes 190 member countries.
Key Information
- Founded: July 1944, Bretton Woods, New Hampshire, United States
- Managing Director: Kristalina Georgieva
- Abbreviation: IMF
- Founders: John Maynard Keynes, Harry Dexter White
- Parent Organization: United Nations
Major Programs
- Special Drawing Rights (SDR): An international reserve asset to supplement member countries’ official reserves.
- Structural Adjustment Programs (SAPs): Economic policies promoted to developing countries for economic restructuring.
- Debt Relief Initiatives: Programs like the Heavily Indebted Poor Countries (HIPC) Initiative to help manage debt.
Recent Focus
- Addressing the economic impact of the COVID-19 pandemic.
- Promoting inclusive growth and reducing inequality.
- Supporting the transition to a green economy and tackling climate change.
Reports Published by the IMF
- World Economic Outlook (WEO): Provides analysis and projections of global economic developments.
- Global Financial Stability Report (GFSR): Examines the global financial system and highlights risks.
- Fiscal Monitor: Offers insights into public finance developments and policies.
- Regional Economic Outlooks: Covers economic developments and prospects by region.
- Annual Report: Summarizes the IMF’s operations and financial activities over the past year.
Login with Google