IMF forecasts India’s economy to grow 6.8% this scal year
World economy is ‘remarkably resilient’ but challenges remain, Fund says in its ‘World Economic Outlook April 2024’; lifts India forecast from Jan.
The International Monetary Fund (IMF) on Tuesday raised its growth projection for India’s GDP in the current scal year 2024/25 to 6.8%, and forecast a 6.5% expansion next year. The latest FY25 forecast is a 0.3 percentage point upward revision from January’s projection, the IMF said in its World Economic Outlook April 2024, released on Tuesday.
The global economy had remained “remarkably resilient” with steady growth and in£ation returning to target and had “deed expectations of stag£ation and global recession” in the wake of the post-pandemic supply disruptions, Russia’s invasion of Ukraine and subsequent global energy and food crises as well as the monetary tightening across economies, the IMF observed.
It projected global output growth in 2024 and 2025 at 3.2%, after bottoming out at at 2.3% at the end of 2022.
‘Liberalise investment’
The projected moderation in India’s growth rate from 7.8% last scal year was due to a tightening in monetary and scal policy, necessary to bring in£ation down, IMF economist Daniel
Leigh said at a press brieng on the report. In£ation was projected to be 4.6% this year and 4.2% next year, Mr. Leigh added.
Growth could end up higher than expected due to strengthening private demand, he added.
“Also, an upside comes from the potential for reforms that would liberalise foreign investment and really boost exports and boost jobs and labour force participation,” he said, partly in response to a question from The Hindu on policy recommendations for the Indian economy and addressing unemployment concerns.
“So, it’s a very strong outlook and... a balanced risk outlook,” he added.
For the global economy, the IMF expected median headline in£ation to ease from 2.8% at the end of this year to 2.4% at the end of 2025. “Most indicators point to a soft landing,” the Fund said.
‘Less scarring’
“Another piece of good news is that we project less economic scarring,” IMF Chief Economist Pierre-Olivier Gourinchas said during a virtual brieng.
Scarring, or the gap in output compared with prepandemic levels, was less in most regions with the exception of low income and developing countries, he said.
The IMF called for vigilance, citing recent in£ation numbers that were pushing upward. Most of the slowing in in£ation was due to falling energy prices but services in£ation remained high and could derail this disin£ation path, the IMF cautioned.