IMF upgrades India’s growth outlook to 6.8%, retains position as World’s fastest growing economy

The International Monetary Fund (IMF) has recently upgraded India’s economic forecast, predicting a remarkable 6.8% GDP growth for the financial year 2024-25 (FY25). This upward revision marks a significant 30 basis point increase from their previous estimate, firmly establishing India as the world’s fastest-growing major economy, outpacing China’s projected growth of 4.6%.

The IMF attributes India’s impressive growth trajectory to sustained domestic demand and a burgeoning working-age population. Moreover, the IMF has marginally increased its global growth projection to 3.2% for 2024, indicating the resilience of the global economy despite ongoing challenges. India’s GDP growth trajectory is expected to remain strong, with projections of 7.8% in FY24, 6.8% in FY25, and 6.5% in FY26. This positive outlook is echoed by rating agencies like Fitch and Barclays, which have also revised India’s FY24 growth forecast upwards to 7.8%, aligning with the government’s optimistic stance.

However, China’s growth prospects have been dampened by a slowdown in its property sector, prompting the IMF to remain open to potential upward revisions based on China’s Q1 2024 performance. While highlighting the global economy’s resilience, the IMF also underscores the challenges posed by rising energy prices and the need for sustainable growth.

Overall, the IMF’s optimistic revision underscores India’s strength in domestic consumption and demographics, indicating that India’s lead as the world’s fastest-growing major economy is likely to persist in the near future.