IMF Raises India's GDP Growth Forecast to 7% for 2024-25
Seeing positive growth in private consumption, particularly in rural areas, the International Monetary Fund (IMF) has cut the GDP growth of India for 2024-25 to 7 percent from the previous outlook of 6.8 percent.
"The outlook for India's growth has been revised up to 7 percent this year, on the strength of carry-over from upward revisions to growth last year and an improvement in prospects for private consumption, especially in rural areas", the report said. Though the growth forecast for this year had been raised, the IMF has retained its estimate of India's economic expansion in 2025-26 at 6.5 per cent.
Noting the share of India and China in global growth, IMF's First Deputy Managing Director Gita Gopinath said, "Growth in India and China will account for almost half of global growth in 2024. Growth in major advanced economies is more aligned: Euro area growth picks up as the US shows signs of cooling after a strong year".
The IMF projection for the Chinese growth rate is going to be 5% in 2024, which is further going to decline to 4.5% in 2025. Now, as far as advanced economies are concerned, the US GDP growth rate is going to be around 2.6% for 2024, gradually declining to 1.9% in 2025. Growth of the Japanese economy is seen at 0.7 percent in 2024 that will pick up a bit to 1 percent in 2025. The Euro area is expecting GDP growth of 0.9 percent in 2024, which is likely to improve to 1.5 percent in 2025.
It held global growth projections for 2024 and 2025 constant at 3.2% and 3.3%, respectively, in line with the April 2024 World Economic Outlook forecast. But the actual IMF report showed continuing challenges to growth, especially those related to inflation.
"Services inflation is holding up progress on disinflation, while also complicating monetary policy normalization. Upside risks to inflation now increase, raising the prospect of higher-for-even longer interest rates in the context of escalating trade tensions and rising policy uncertainty. The policy mix should thus be sequenced carefully to achieve price stability and replenish diminished buffers", the report elaborated.
This upward revision in India's growth forecast cements the strong fundamentals of the nation and mirrors the positive effect that improving consumption patterns, especially in rural areas, have had on the overall economic performance.
