IMF raises India's GDP growth projection for FY25 by 20 bps to 6.5%
New Delhi, Jan 30, 2024
Reserve Bank of India Governor Shaktikanta Das in a speech delivered at Davos in the World Economic Forum earlier this month said he expects the GDP growth in India to touch 7 per cent in FY25
The International Monetary Fund (IMF) on Tuesday raised India’s growth projection for financial year 2025 by 20 basis points to 6.5 per cent in its update to the World Economic Outlook (WEO) amid buoyant domestic spending and better global growth prospects.
For financial year 2024, the Fund raised the growth estimate for India by 40 basis points to 6.7 per cent compared to its October report. This is lower than the 7.3 per cent growth projected by the National Statistical Office earlier this month.
“Growth in India is projected to remain strong at 6.5 per cent in both 2024 (FY25) and 2025 (FY26), with an upgrade from October of 0.2 percentage points for both years, reflecting resilience in domestic demand,” the IMF said in its report.
Reserve Bank of India Governor Shaktikanta Das in a speech delivered at Davos in the World Economic Forum earlier this month said he expects the GDP growth in India to touch 7 per cent in FY25. “Our research teams are in the process of making a comprehensive assessment for our forthcoming February 2024 monetary policy. I am saying this on the basis of strong momentum of economic activity seen in India,” he added.
The Finance Ministry in its review of the Indian Economy released on Monday said the economy is likely to grow at or over 7 per cent for the fourth consecutive year in a row in FY25. “That would be an impressive achievement, testifying to the resilience and potential of the Indian economy. It augurs well for the future,” it added.
The IMF raised its global growth projection for 2024 by 20 basis points to 3.1 per cent, compared to its October report, citing greater-than-expected resilience in the United States and several large emerging market and developing economies, as well as fiscal support in China. However, this is still below the historical (2000–19) average global growth of 3.8 per cent, with elevated central bank policy rates to fight inflation, withdrawal of fiscal support amid high debt weighing on economic activity, and low underlying productivity growth.
For China, the Fund increased its growth forecast for 2024 by 40 basis points to 4.6 per cent. “The upgrade reflects carryover from stronger-than-expected growth in 2023 and increased government spending on capacity building against natural disasters,” it reasoned.
IMF Chief Economist Pierre-Olivier Gourinchas said Brazil, India, and Southeast Asia’s major economies continue to show great resilience, with accelerating growth. “The global economy begins the final descent toward a soft landing, with inflation declining steadily and growth holding up. But the pace of expansion remains slow, and turbulence may lie ahead. New commodity and supply disruptions could occur, following renewed geopolitical tensions, especially in the Middle East. Shipping costs between Asia and Europe have increased markedly, as Red Sea attacks reroute cargoes around Africa,” he cautioned.
[The Business Standard]
