International Monetary Fund (IMF) raised India’s GDP growth forecast for the fiscal year 2024-25 (FY25) to 7% in its July 2024 World Economic Outlook Update. International Monetary Fund increased GDP from its previous forecast of 6.8% in April 2024.
The upward revision is attributed to stronger domestic demand that’s Improving private consumption, especially in rural areas, has been a key driver of growth.
Investment activity has remained robust, supported by government initiatives and infrastructure projects. External demand has been relatively strong, contributing to India’s economic performance.
International Monetary Fund (IMF) forecast for US and China:
- The United States’ growth forecast is revised upward to 1.9% in 2024, reflecting stronger momentum in services and higher net exports.
- China’s growth projection remains unchanged at 5.0% in 2024, supported by a rebound in private consumption and strong exports.
The International Monetary Fund (IMF’s) upward revision of India’s GDP forecast reflects a positive outlook for the Indian economy in the near term.
International Monetary Fund (IMF): World Economic Outlook July 2024 updates
The July 2024 update of the World Economic Outlook (WEO) by the International Monetary Fund (IMF) highlights the following key points:
Global Growth:
Global growth is projected to remain at 3.2% in 2024 and 3.3% in 2025, broadly unchanged from the April 2024 forecast.
While the global economy has shown resilience, it remains in a “sticky spot” due to persistent services inflation, tighter financial conditions, Russia’s war in Ukraine, and escalating geopolitical tensions.
Inflation:
Headline inflation is expected to decline from 6.8% in 2023 to 5.9% in 2024 and 4.5% in 2025, but core inflation (excluding volatile food and energy prices) is projected to decline more gradually.
Services inflation is proving more persistent than anticipated, complicating monetary policy normalization and posing upside risks to inflation.
Policy Recommendations:
- The IMF emphasizes the need for a careful sequencing of policies to achieve price stability, rebuild fiscal buffers, and ensure financial stability.
- Central banks should continue to prioritize price stability while carefully managing risks to financial stability.
- Fiscal policy should aim to rebuild buffers while supporting vulnerable groups and investing in supply-side reforms.