IMF upgrades India’s growth forecast to 7% for FY25: Robust domestic demand drives optimism

The International Monetary Fund (IMF) has revised upwards India’s growth forecast for the financial year 2024-25 to 7%, from its earlier estimate of 6.8%. This positive outlook is underpinned by the robust performance of domestic consumption, especially in rural areas.

In its latest World Economic Outlook (WEO) update, the IMF maintained its global growth projection for 2024 at 3.2%. However, the fund expressed concerns about potential risks to the global economy, including persistent inflation, geopolitical tensions, and policy uncertainties.

Despite a challenging global economic environment, India’s economy continues to demonstrate resilience. The IMF’s projection for India’s GDP growth in FY26 remains unchanged at 6.5%.

Key highlights from the IMF report:

• India’s GDP growth for FY24 is estimated at 7.8%.
• Consumer price inflation is projected to decline to 4.6% in FY25 and 4.2% in FY26.
• China’s economic growth is expected to slow down in the coming years due to property sector challenges.

Despite the optimistic outlook, India is not immune to global challenges. Rising inflation, although showing signs of moderation, remains a concern. Additionally, the country needs to address infrastructure gaps, create more jobs, and reduce income inequality to ensure sustained and inclusive growth.

The government’s role in fostering a conducive business environment, attracting foreign investments, and implementing structural reforms will be crucial in realizing India’s full economic potential.