The International Monetary Fund (IMF) upgraded its growth forecast for India on Tuesday, now projecting a growth rate of 6.8 per cent, up from the previous estimate of 6.5 per cent in January. The revision is attributed to robust domestic demand and a growing working-age population.
India maintains its position as the world's fastest-growing economy, outpacing China, which is forecasted to grow at 4.6 per cent during the same period.
According to the latest edition of the World Economic Outlook released by the IMF ahead of its annual spring meetings with the World Bank, India's growth is expected to remain strong at 6.8 per cent in 2024 and 6.5 per cent in 2025. This resilience is fueled by sustained domestic demand and the increasing working-age population.
Meanwhile, growth in emerging and developing Asia is anticipated to moderate from an estimated 5.6 per cent in 2023 to 5.2 per cent in 2024 and 4.9 per cent in 2025, showing a slight upward revision compared to the January 2024 WEO Update.
In January, the IMF had forecasted India's growth at 6.5 per cent for 2024. However, the growth in China is expected to decelerate from 5.2 per cent in 2023 to 4.6 per cent in 2024 and 4.1 per cent in 2025 due to the easing of one-off factors, such as post-pandemic consumption boost and fiscal stimulus, along with persistent weaknesses in the property sector.
Globally, growth, estimated at 3.2 per cent in 2023, is projected to maintain the same pace in 2024 and 2025. The forecast for 2024 has been revised up by 0.1 percentage point from the January 2024 WEO Update and by 0.3 percentage points from the October 2023 WEO.
Pierre-Olivier Gourinchas, chief economist of the IMF, emphasized the need for policymakers to prioritize measures that enhance economic resilience, including strengthening government finances and revitalizing economic growth prospects.
Despite challenges such as supply chain disruptions post-pandemic and the energy and food crisis triggered by geopolitical tensions, the global economy has shown resilience with steady growth and a slowdown in inflation. Gourinchas noted that global growth bottomed out at the end of 2022 and is expected to hold steady at 3.2 per cent this year and next, with inflation declining from 2.8 per cent at the end of 2024 to 2.4 per cent at the end of 2025.
While some countries have rebounded from the pandemic's impact, low-income developing countries still face challenges in recovering. China's economy continues to be affected by the downturn in its property sector, requiring substantial measures to address underlying issues and stimulate domestic demand.
Overall, while the global economy shows signs of resilience, policymakers must remain vigilant and proactive in addressing ongoing challenges to ensure sustained growth and stability.
Read also | Upcoming Government Bond Auction: Rs 24,000 Crore on Offer This Friday
