The growth estimate for India has been revised upward by the International Monetary Fund (IMF), which now projects a 7% expansion for the fiscal year 2024–2025. Compared to the 6.8% projection given in April, this is an increase. The strong rise from the prior year and better outlooks for private consumption, particularly in rural areas, are the reasons for the higher adjustment.
IMF kept 6.5% growth prediction
Nonetheless, the IMF kept its 6.5% growth prediction for the upcoming fiscal year, 2025–2026. The world economy is facing difficulties, even if India’s economic prognosis is still favorable. The IMF issued a warning about sustained inflation in several large economies, which may require long-term increases in interest rates. Consequently, there may be threats to global growth.
The Washington-based lender voiced worries about the inflation of services caused by rising wages and geopolitical unrest. The risk of higher interest rates for extended periods of time is increased by these factors, which also hinder efforts to normalize monetary policy.
The IMF maintained its 3.2% prediction for this year and increased it by 0.1 percentage points to 3.3% for next year despite these obstacles. The lender emphasized that the primary forces behind global growth are Asia’s emerging market countries, particularly India.
Flaws in the world economy
Even if India’s economy is doing well, the IMF also highlighted certain fundamental flaws in the world economy, like the continuous problems in the US and China’s real estate market. By 2029, the lender predicted that China’s growth would have slowed to 3.3%.
India’s economy is growing, and its resilience is demonstrated by the IMF’s higher revision of the growth estimate. Still, there are still many unknowns in the world economy, including inflation and geopolitical unrest.
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