The International Monetary Fund (IMF) has revised its forecast for India's gross domestic product (GDP) growth for the fiscal year 2025 (FY25), increasing it by 30 basis points (bps) to 6.8% from the previous prediction of 6.5% in January.
This adjustment reflects the strength of domestic demand and the expanding working-age population in India, according to the IMF. India maintains its status as the world's fastest-growing economy, outpacing China's growth projection of 4.6% for the same period.
For FY26, the IMF anticipates India's GDP growth to be at 6.5%. Additionally, the IMF forecasts India's retail inflation to be 4.6% in FY25 and 4.2% in FY26.
The IMF's latest edition of the World Economic Outlook highlights India's robust growth prospects, projecting growth rates of 6.8% in 2024 and 6.5% in 2025, driven by sustained domestic demand and a rising working-age population.
While India's growth trajectory remains positive, the IMF also notes a slight downward revision in growth forecasts for emerging and developing Asia, including China. China's growth is expected to moderate from 5.2% in 2023 to 4.6% in 2024 and 4.1% in 2025, attributed to factors such as waning post-pandemic consumption stimulus and ongoing weaknesses in the property sector.
Globally, the IMF expects gradual economic growth, with the US leading the way. Despite challenges like high inflation, weak demand in certain regions, and geopolitical tensions, the IMF projects global real GDP growth of 3.2% for both 2024 and 2025.
IMF's chief economist Pierre-Olivier Gourinchas highlights the resilience of the global economy, noting that many countries have rebounded from the pandemic-induced downturn quicker than anticipated. However, concerns about inflation persist, with the IMF expecting a gradual decline over the year, potentially enabling central banks to adjust policy rates.
The IMF underscores the need for comprehensive restructuring in China's property sector to avert prolonged downturns in domestic demand and deflationary pressures. Recommendations include expediting the exit of non-viable developers and supporting vulnerable households to stimulate consumer demand.
Despite challenges, the IMF remains optimistic about the growth prospects of major emerging market countries like Brazil and India, emphasizing their increasing significance in the global economy. However, low-income developing countries continue to face obstacles in post-pandemic adjustments, with downward revisions in growth forecasts.
