IMF raises India’s FY25 growth forecast to 6.8%

The International Monetary Fund (IMF) has raised India’s economic growth projection for the current fiscal to 6.8% from its earlier projection of 6.5%, citing continuing strength in domestic demand and a rising working-age population.

“Growth in India is projected to remain strong at 6.8% in 2024 (FY25) and 6.5% in 2025, with the robustness reflecting continuing strength in domestic demand and a rising working-age population,” the IMF said in an update to its World Economic Outlook (WEO). 

The latest growth project has been raised from 6.5% projected in January and 6.3% last October. 

With China estimated to grow only at 5.2% in 2024, India remains the fastest-growing economy in the world. 

“Growth in emerging and developing Asia is expected to fall from an estimated 5.6% in 2023 to 5.2% in 2024 and 4.9% in 2025, a slight upward revision compared with the January 2024 WEO Update. Growth in China is projected to slow from 5.2% in 2023 to 4.6% in 2024 and 4.1% in 2025 as the positive effects of one-off factors—including the postpandemic boost to consumption and fiscal stimulus—ease and weakness in the property sector persists,” the IMF said. 

Global growth, estimated at 3.2% in 2023, is projected to continue at the same pace in 2024 and 2025. The forecast for 2024 is revised up by 0.1 percentage point from January, and by 0.3 percentage point from October. 

Several rating agencies and the Reserve Bank of India (RBI) have projected a similar estimate. 

Moody’s has predicted GDP growth in 2024 at 6.8%, citing ‘stronger-than-expected’ economic data in 2023 and fading global economic headwinds.

India’s real GDP expanded by 8.4% year-on-year in the final quarter of 2023, pushing the full-year growth to 7.7%.

RBI has projected a 7% real GDP growth for the fiscal year ending next March, including a growth rate of 7.2% in April-to-June, 6.8% in July-to-September, 7% in October-to-December, and 6.9% in January-to-March. 

Global growth to stay put

The IMF projected that global growth, estimated at 3.2% in 2023, is projected to continue at the same pace in 2024 and 2025. It revised the forecast for 2024 by 0.1 percentage point from its January update, and by 0.3 percentage point from its October update. 

The multilateral institution said growth in emerging and developing Asia is expected to fall from an estimated 5.6% in 2023 to 5.2% in 2024 and 4.9% in 2025, a slight upward revision compared with the January update.

Commenting on the projections, IMF chief economist Pierre-Olivier Gourinchas said the “global economy remains remarkably resilient, despite gloomy predictions, with steady growth and inflation slowing almost as quickly as it rose.”

He advised policymakers to prioritize steps toward greater economic resilience such as strengthening government finances and revitalizing economic growth prospects.

“Bringing inflation back to target should remain the priority. While inflation trends are encouraging, we are not there yet. Somewhat worryingly, progress toward inflation targets has somewhat stalled since the beginning of the year. This could be a temporary setback, but there are reasons to remain vigilant,” he added.