October 23, 2024
New Delhi, India
IMF
The International Monetary Fund (IMF) has maintained its growth projections for India at 7% for the fiscal year 2024-25 (FY25) and 6.5% for FY26, according to its latest World Economic Outlook (WEO) report released on Tuesday. This stability comes as India’s economy reconnects with its potential after exhausting pent-up demand from the pandemic.
IMF Outlook on India’s Growth
The IMF noted that India’s GDP growth would moderate from 8.2% in FY24 to 7% in FY25 and 6.5% in FY26. The slowdown is attributed to the exhaustion of demand accumulated during the pandemic. Despite this moderation, the Indian economy remains on a solid growth path, supported by robust consumption and investment momentum, as also reflected in the Reserve Bank of India’s (RBI) recent policy review.
Global Growth and Sectoral Shifts
On a global level, the IMF projected stable growth of 3.2% for 2024 and 2025. However, sectoral shifts are evident, with goods prices remaining elevated and a growing rebalancing towards services. Manufacturing activities are increasingly shifting to emerging markets like India and China, as advanced economies face competitiveness challenges.
Inflation Trends and Risks
For India, the IMF projects headline inflation to ease to 4.4% in FY25 and further to 4.1% in FY26. Globally, inflation is expected to drop from 6.7% in 2023 to 5.8% in 2024, with advanced economies reaching their inflation targets sooner than emerging markets. The report also warned of risks such as geopolitical tensions, rising protectionism, and tightening monetary policies impacting labor markets.
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