IMF up India’s growth forecast to 6.8% from 6.5% for FY25

The International Monetary Fund, or IMF, has raised its forecast of India’s Gross Domestic Product (GDP) growth for the fiscal year 2025 (FY25) to 6.8 per cent from its previous prediction of 6.5 per cent in January. While the IMF prediction of the country’s GDP growth for fiscal 2026 (FY26) currently stands at 6.5 per cent, the international agency mentions India as a significant emerging market that will play an increasing role in the global economy in future.

The increase in GDP for FY25 marks a jump of 30 Basis Points (BPs) and, according to the IMF, the modification is an outcome of India’s surging working-age population as well as a robust domestic demand. India is currently positioned as the fastest-growing economy in the world and the situation seems unlikely to change, what with China's projected growth for FY25 predicted to be around 4.1 per cent.

While the IMF predicts a 4.6 per cent retail inflation for India in FY25, the figure should come down to 4.2 per cent in FY26.

The IMF revealed in its latest edition of the World Economic Outlook that “growth in India is projected to remain strong” with “robustness reflecting continuing strength in domestic demand and a rising working-age population.”

“Growth in China is projected to slow from 5.2 per cent in 2023 to 4.6 per cent in 2024 and 4.1 per cent in 2025, as the positive effects of one-off factors including the post pandemic boost to consumption and fiscal stimulus ease and weakness in the property sector persists," the IMF added.

Globally, the IMF forecasts a sluggish but stable economic growth. The global real GDP growth is estimated to be around 3.2 per cent for FY24 as well as FY25. The slowing down is mostly an outcome of geopolitical unrest, soaring inflation all over the world, and diminishing demand in many parts, the IMF said.

While the United States would continue to lead the way for global economy, the IMF report talks of significant growth in several emerging markets such as India and Brazil, and mentions that these countries will play a role in the global economy. Despite all odds, “global economy remains quite resilient”, IMF's chief economist, Pierre-Olivier Gourinchas told Reuters recently.