IMF raises GDP forecast for India

The International Monetary Fund (IMF), on Tuesday, upgraded its GDP forecast for India for the current financial year (FY24) to 6.3 per cent from 6.1 per cent, citing stronger-than-expected domestic demand.

In the October update of its World Economic Outlook (WEO), the IMF kept its global growth projection for calendar year 2023 at 3.5 per cent, unchanged from the July update. It raised the GDP projections for United States and Japan, but slashed forecast for the European Union, China, Canada, Italy, Germany, Saudi Arabia and others.

“Growth in India is projected to remain strong, at 6.3 per cent in both FY24 and FY25, with an upward revision of 0.2 percentage points for FY24, reflecting stronger-than-expected consumption during April-June,” WEO said in a statement.

India had retained its tag as the fastest growing major economy, as GDP rose by 7.8 per cent, driven largely by robust growth in the services sector, strong consumption and favourable base.

The IMF said in its WEO October update that the global economy continues to recover slowly from the blows of the pandemic, Russia’s invasion of Ukraine, and the cost-of-living crisis.

“Despite the disruption in energy and food markets caused by the war, and the unprecedented tightening of global monetary conditions to combat decades-high inflation, the global economy has slowed, but not stalled,’’ the statement said.

It said that global headline inflation also continues to decelerate, from 9.2 per cent in 2022, on a year-over-year basis, to 5.9 per cent this year and 4.8 per cent in 2024.

“The slowdown is more pronounced in advanced economies than in emerging market and developing ones. Within advanced economies, the US surprised on the upside, with resilient consumption and investment, while euro area activity was revised downward,” he said adding that many emerging market economies proved quite resilient and surprised on the upside, with the notable exception of China, facing growing headwinds from its real estate crisis and weakening confidence.