IMF Raises India's Growth Forecast To 7 Per Cent From 6.8 Per Cent For FY25

Over the past three years, India has consistently grown at over 7 per cent. In FY24, the economy experienced an 8.2 per cent growth, bolstered by investment and manufacturing, IMF says

The International Monetary Fund (IMF) has increased India's growth forecast for FY25 to 7 per cent, up from the 6.8 per cent projected in April, according to the latest World Economic Outlook released on Tuesday. "The forecast for growth in India has also been revised upward, to 7 per cent, this year, with the change reflecting carryover from upward revisions to growth in 2023 and improved prospects for private consumption, particularly in rural areas," the IMF stated.

Looking ahead, the global financial institution anticipates India's economy to expand by 6.5 per cent in FY26, maintaining its previous projection from April. This adjustment follows the Reserve Bank of India's upward revision in June, which saw India's growth forecast increase to 7.2 per cent from an earlier estimate of 7 per cent.

Over the past three years, India has consistently grown at over 7 per cent. In FY24, the economy experienced an 8.2 per cent growth, bolstered by investment and manufacturing. However, private consumption spending lagged at 4 per cent. Economists predict a rise in rural consumption in FY25, conditional on favourable monsoon conditions and lower inflation.

IMF Deputy Managing Director Gita Gopinath highlighted the significance of India and China in the global economic landscape, tweeting, "New WEO update: Growth in India & 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."

In June, India's inflation climbed back above 5 per cent after a four-month hiatus, driven by a surge in food inflation to 9.4 per cent from 8.7 per cent.

On the global stage, the IMF has maintained its growth forecast at 3.2 per cent for 2024, with an anticipated increase to 3.3 per cent in 2025. The report predicts a slowdown in growth for the US and Japan compared to April estimates, while forecasting a faster growth pace for China.

The IMF also noted balanced risks to global growth, with rising risks to inflation expected to increase the likelihood of prolonged high-interest rates.