IMF Lifts India’s 2025 Growth Forecast to 7.3%
The International Monetary Fund (IMF) has upgraded India’s economic growth projection for 2025 to 7.3%, citing strong domestic demand and a growing workforce. The forecast for the current fiscal year (2024-25) remains at a robust 7.2%.
Key Takeaways
- India’s 2025 GDP growth forecast raised to 7.3% from 7.2%.
- 2024-25 forecast held steady at 7.2%, following 8.2% growth in 2023-24.
- Upgrades reflect strong domestic demand and demographic advantages.
- Global growth is projected at a steady 3.2% for 2024 and 2025.
India’s Growth Trajectory
The IMF’s latest World Economic Outlook (WEO) update projects India’s growth at 7.2% in 2024 and 7.3% in 2025. The revision for next year reflects a carryover effect from a stronger-than-expected performance in 2024. The fund upgraded its April forecast for both years by 0.3 percentage points, highlighting sustained strength in the economy.
Global Economic Outlook
The IMF projects global growth to hold steady at 3.2% in both 2024 and 2025. While the 2024 forecast is unchanged from April, the 2025 projection was revised up by 0.2 percentage points.
Major Economies:
- United States: 2.6% (2024), 2.3% (2025)
- China: 5% (2024), 4.5% (2025)
- Euro Area: 0.9% (2024), 1.5% (2025)
Resilience and Inflation Trends
IMF Chief Economist Pierre-Olivier Gourinchas stated the global economy has shown “surprisingly resilient” growth with gradually slowing inflation. He noted Q1 2024 data was stronger than expected in advanced economies, while emerging markets maintained solid growth.
Inflation is falling faster than anticipated in most regions, aided by the unwinding of last year’s energy price shocks and tighter monetary policy.
Inflation Projections:
- Global: To decline from 6.8% (2023) to 5.9% (2024) and 4.5% (2025).
- Advanced Economies: From 4.6% (2023) to 2.6% (2024) and 2% (2025).
- Emerging Markets: From 8.3% (2023) to 6.6% (2024) and 5.9% (2025).
Balanced Risks and Policy Priorities
Gourinchas said risks to the global outlook are now broadly balanced. Upside potential includes faster-than-expected disinflation, allowing for monetary easing. Downside risks include new price spikes, persistent inflation delaying rate cuts, fiscal consolidation weakening growth, and intensifying geoeconomic fragmentation. AI is noted as a potential productivity booster that could also cause disruptions.
He concluded the global economy appears headed for a soft landing but challenges remain. Policymakers should prioritise rebuilding fiscal buffers through tax reforms and spending restraint. Monetary policy should stay data-dependent, easing gradually as inflation returns to target. Structural reforms and multilateral cooperation are essential to boost growth and manage fragmentation and AI-related challenges.
