IMF Upgrades India’s Growth Forecast, Calls It Global Engine
The International Monetary Fund (IMF) has raised India’s growth forecast for the current fiscal year (FY24) to 6.7%, citing robust domestic demand. The upgrade reinforces India’s role as a key driver of the global economy.
Key Takeaways
- IMF raises India’s FY24 growth forecast to 6.7% (up 0.2%).
- FY25 forecast also increased to 6.5% from 6.3%.
- Chief Economist calls India’s performance “strong” and “resilient.”
- Growth driven by domestic demand, consumption, and public investment.
Detailed Growth Projections
In its latest World Economic Outlook update, the IMF projects India’s economy to grow at 6.5% in FY25, a 20-basis-point increase from its October forecast. For the current fiscal year (FY24), the forecast is revised upward by the same margin to 6.7%.
IMF’s Chief Economist Pierre-Olivier Gourinchas said India’s growth performance has been “quite strong” and “very resilient” over the last few years. “We’ve had, again, an upgrade on India. So, India is providing a lot of growth impulse to the global economy,” he said.
Drivers and Domestic Resilience
India’s growth is powered by strong domestic demand, with private consumption and public investment as key pillars. The IMF expects inflation to decline gradually, aided by monetary policy and lower global commodity prices.
The upgrade aligns with India’s recent economic resilience. GDP growth for the July-September quarter of FY24 stood at a robust 7.6%, surpassing estimates and cementing its status as the fastest-growing major economy.
Cautions and Global Context
The IMF also highlighted concerns, urging continued fiscal consolidation to address high public debt and deficits. It stressed the need for structural reforms to enhance productivity and job creation.
Globally, the IMF maintained its 2024 growth forecast at 3.1% but slightly raised the 2025 outlook to 3.2%. It warned that geopolitical tensions, especially in the Middle East, could disrupt commodity markets and fuel inflation.
Consensus Among Global Agencies
The IMF’s positive revision is part of a broader trend. The World Bank recently increased its FY24 forecast for India to 6.9%, while the Asian Development Bank (ADB) upgraded its estimate to 6.7%.
India’s growth momentum is expected to persist, supported by robust domestic demand, rising investment, and an improving external sector. The government’s focus on and digitalization is likely to provide further impetus.
