IMF ups India FY25 GDP growth outlook to 6.8%
At 6.8%, the forecast was slightly lower than the 7% growth estimated by the RBI
NEW DELHI: India will remain the world’s fastest growing major economy till 2029, although the rate of expansion may moderate, the International Monetary Fund said on Tuesday in its latest World Economic Outlook.
The country’s gross domestic product (GDP) growth rate is expected to decline to 6.8% in the year to March 2025 from 7.8% in 2023-24 and then stay at 6.5% until 2028-29, the multilateral organisation predicted.
The latest projections upgraded India’s growth by 0.3 percentage point compared to the January update.
“Growth in India is projected to remain strong at 6.8 percent in 2024 and 6.5 percent in 2025, with the robustness reflecting continuing strength in domestic demand and a rising workingage population,” the IMF said.
At 6.8%, the fund’s forecast was slightly lower than the 7% GDP growth estimated by the Reserve Bank of India.
As far as the world economy is concerned, a soft landing looks more likely although overall growth momentum will continue to be weak by historical standards, the IMF said. Global GDP growth is likely to remain at 3.2% in 2024 and 2025, it said.
“The pace of expansion is low by historical standards, owing to both near-term factors, such as still-high borrowing costs and withdrawal of fiscal support, and longer-term effects from the Covid-19 pandemic and Russia’s invasion of Ukraine; weak growth in productivity; and increasing geo-economic fragmentation,” the WEO report said. “The latest forecast for global growth five years from now -- at 3.1% -- is at its lowest in decades. The pace of convergence toward higher living standards for middle- and lower-income countries has slowed, implying a persistence in global economic disparities.”
Among other major economies, growth in the US is expected to increase from 2.5% in 2023 to 2.7% in 2024 before slumping to 1.9% in 2025. While the US will continue to perform better than advanced economies as a whole, the latter’s growth is expected to increase from 1.7% to 1.8% between 2024 and 2025.
China, which delivered a positive surprise with a growth of 5.3% in the March quarter, is expected to expand at 4.6% and 4.1% in 2024 and 2025, respectively, compared to 5.2% in 2023. Emerging markets will grow at 4.2% in 2024 and 2025 compared to 4.3% in 2023, the IMF said.
The outlook was cautiously optimistic on whether the global economy was out of the woods as far as navigating the pandemic and post-pandemic inflation shocks were concerned. “Economic activity was surprisingly resilient through the global disinflation of 2022-23. As global inflation descended from its mid-2022 peak, economic activity grew steadily, defying warnings of stagflation and global recession,” the fund said, underlining the need for caution in both monetary and fiscal policies.