The IMF increases India's GDP growth prediction for FY25 and FY26 to 6.5% ahead of the budget

The IMF increases India's GDP growth prediction for FY25 and FY26 to 6.5% ahead of the budget

The IMF increases India's GDP growth prediction for FY25 and FY26 to 6.5% ahead of the budget

The International Monetary Fund said in its most recent update to its World Economic Outlook report that "resilience in domestic demand" is the reason for India's growth upgrade.

The growth estimate for India provided by the IMF is becoming closer to the official Indian growth estimate.

The Indian GDP growth prediction for 2024–25 has been revised upward by 20 basis points to 6.5% by the International Monetary Fund (IMF), however this is below the expectations of Indian authorities.

The multinational agency has lowered its growth projection for 2023–24 to 6.5%, which is 20 basis points less than the previous estimate of 6.7% for that year. One tenth of a percentage point is equal to one basis point.

In a similar vein, the fund increased its growth estimate for 2025–2026 by 20 basis points, to 6.5%.

In its World Update on January 30, the IMF said, "Growth in India is estimated to remain strong at 6.5 per cent in both 2024 as well as 2025, Report Phrase up 0.2 percentage points to feed both years from October, reflecting persistence in domestic demand." is "Report on Economic Outlook."

The growth estimate has been revised higher ahead of the 2024–25 interim budget announcement, when the Indian Finance Ministry is anticipated to keep advancing efforts to strengthen the country's finances and chances for development. Finance Minister Nirmala Sitharaman seems to be trying to maintain the budget deficit at 5.3 percent of GDP for 2024–2025, based on an economist poll conducted by Moneycontrol. Economists note that the budgetary estimates for the next year assume nominal GDP growth of 10.5%, which is higher than the first advance estimate of 8.9% for 2023–2024 provided by the statistics ministry.

The Statistics Ministry has also estimated that real growth for 2023–24 would be 7.3%. This is in response to the unexpected GDP data that was made public in November, which revealed that the Indian economy expanded by 7.6% between July and September.

The Finance Ministry said in a study on January 29 that the Indian economy might rise closer to 7% in 2024–2025, despite the fact that the budget does not project real GDP growth.

According to a report written by representatives of Chief Economic Adviser V Ananth Nageswaran's office, "the strength of domestic demand has stimulated the economy to a growth rate of over 7 per cent throughout the past three years," the ministry said.

Similar statements have also been made by the RBI, however it hasn't updated its official projection for 2024–2025 since it was last updated in October 2023. When its monetary policy committee releases its updated outlook for the next year on February 8, the central bank is scheduled to make the announcement. choice of interest rate.

The IMF gave India many commendations, although it merely increased its prediction for world growth in 2024.

The clouds are beginning to part. The world economy is starting its last fall towards a gentle landing as growth rates are stagnating and inflation is declining. However, the rate of growth is still modest, and further unrest is possible, according to Pierre-Olivier Gourinchas, chief economist at the IMF.

Russia (+1.5 percent), the US (+0.6 percent), and China (+0.4 percent) led the increased growth revisions for 2024. But compared to last year, Europe is expanding more slowly this year.

According to Gourinchas, there are still unknowns and "two-sided risks" for central banks. Initially, theyMaking sure that there isn't an early interest rate decrease that "would erode hard-earned credibility and lead to a surge in inflation" is imperative. Additionally, they must "in time" normalize monetary policy.

The IMF's senior economist said, "Not doing so would jeopardize growth as well as risk inflation falling below target."

The most recent IMF projections indicate that after growing by 6.8 percent in 2023, consumer prices would rise by 5.8 percent in 2024 and 4.4 percent in 2025.