IMF retains India’s GDP growth at 7% for FY25, 6.5% for FY26

In its latest World Economic Outlook (WEO) report, the International Monetary Fund (IMF) retains India’s GDP growth forecast at 7% for the fiscal year 2024-2025. This projection underscores the resilience of India’s economy despite global challenges and signals continued robust growth. However, the IMF has also highlighted potential global risks that could affect growth in the coming years.

India’s Growth Story

India’s economy is expected to grow at 7% in FY25, down from 8.2% in 2023. By FY26, growth may slow to 6.5% as the post-pandemic surge in demand winds down. Despite this moderation, India’s economy remains one of the world’s fastest-growing. Strong domestic consumption, infrastructure projects, and ongoing government reforms will continue to fuel growth.

Global Outlook

Globally, the IMF forecast reflects a mix of opportunities and challenges. While India’s GDP growth remains strong, the global economy will grow at 3.2% in 2024 and 2025. The US saw its forecast rise to 2.8%, while China’s growth was cut to 4.8% for 2024. Both countries face different economic challenges, creating an uneven global recovery.

Inflation and Global Risks

The IMF believes that the global fight against inflation has mostly succeeded, with price pressures easing in many regions. However, other threats loom. Rising debt, geopolitical tensions, and trade disruptions could impact global stability. Tensions in the Middle East, in particular, could drive up commodity prices and disrupt trade.

Although India’s GDP growth outlook is positive, the IMF’s chief economist, Pierre-Olivier Gourinchas, emphasized the need for caution. Global risks, including geopolitical instability and financial uncertainty, could still affect economic outcomes. Governments must remain vigilant to navigate these risks effectively.

“It looks like the global battle against inflation has largely been won, even if price pressures persist in some countries,” IMF chief economist Pierre-Olivier Gourinchas said.

“Strong growth forecast has come along with progress on inflation” in the US, Gourinchas said. “There is strong productivity growth when we look at the US.”