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IMF raises India’s FY25 growth forecast
This comes after the IMF previously raised the country’s growth forecast from 6.5 percent to 6.8 in April.
Representative image. / Unsplash
The International Monetary Fund (IMF) revised its growth forecast for India for the fiscal year 2025, increasing it to 7 percent from the 6.8 percent projected in April.
The IMF's update published July 16 aligns with the Reserve Bank of India's recent upward revision of its growth forecast to 7.2 percent from 7 percent in June. For FY26, the IMF maintained its growth projection for India at 6.5 percent.
Despite the optimistic outlook for India, the IMF cautioned that inflation in major economies is cooling slower than anticipated, posing a potential risk to global economic growth. The Washington-based organization noted that persistent inflation in the services sector, driven by higher wages, along with price pressures from trade and geopolitical tensions, could lead to prolonged higher interest rates.
Services price inflation is holding up progress on disinflation, complicating monetary policy normalization, the IMF stated.
Regarding the global economy, the IMF projected a slight improvement in growth for next year, increasing its forecast by 0.1 percentage point to 3.3 percent. The growth outlook for this year remains unchanged at 3.2 percent. Chief Economist Pierre-Olivier Gourinchas highlighted significant developments, noting that the global economy is still on track for a soft landing.
Gourinchas also expressed concerns about the U.S. economy, emphasizing that maintaining a fiscal stance that increases the debt-to-GDP ratio poses risks to both domestic and global economic stability.
In contrast, the IMF upgraded its growth forecast for China by 0.4 percentage points to 5 percent for this year and 4.5 percent for the next year, citing a rebound in private consumption and robust exports in the first quarter. However, the IMF warned of underlying weaknesses in China's property sector and projected a slowdown in economic growth to 3.3 percent by 2029.
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