IMF Retains Growth Forecast for India at 7 PC in FY25

Chennai: The International Monetary Fund on Tuesday retained the growth of the Indian economy for the current fiscal at 7 per cent and for next year at 6.5 per cent. It also noted that the pent-up demand in India accumulated during the pandemic has been exhausted.

As projected in July, the IMF retained the growth forecast for FY25 at 7 per cent and FY26 at 6.5 per cent. Deloitte India too on Tuesday projected 7 -7.2 per cent growth for the current fiscal, which is closer to RBI’s forecast a few days back.

“In India, the outlook is for GDP growth to moderate from 8.2 per cent in 2023 to 7 per cent in 2024 and 6.5 per cent in 2025, because pent-up demand accumulated during the pandemic has been exhausted, as the economy reconnects with its potential,” IMF said in its update.

Emerging Asia’s strong growth is expected to subside, from 5.7 per cent in 2023 to 5 per cent in 2025. This reflects a sustained slowdown in the region’s two largest countries – India and China, it said. In China, the slowdown is projected to be more gradual.

IMF also has projected the consumer price inflation at 4.4 per cent in FY25 and 4.1 per cent in FY26. India’s Current Account deficit at 1.1 per cent this year and 1.3 per cent next year.

Global headline inflation is expected to fall from an annual average of 6.7 per cent in 2023 to 5.8 per cent in 2024 and 4.3 per cent in 2025.

It also found that manufacturing production is increasingly shifting toward emerging market economies—in particular, China and India—as advanced economies lose competitiveness.

IMF also mentioned that global rice prices have declined by 7.5 per cent, retreating from a multi-year peak reached in January of this year, as crop conditions improved in India and other parts of Asia.

Globally, the growth projection is unchanged and is expected to remain stable yet underwhelming at 3.2 per cent in 2024. However, the growth forecast for 2025 has been marginally revised downward by 10 basis points from 3.3 per cent projected in July.