IMF maintains India’s growth projection at 7% for FY25

IMF projects India's growth at 7%, global inflation down, risks include geopolitical tensions and protectionist policies, triple policy pivot recommended.

The International Monetary Fund (IMF) maintained its June growth rate projects for India in its latest World Economic Outlook (WEO) released on Tuesday (October 22, 2024), to kick off the World Bank and IMF Annual Meetings in Washington.

The multilateral lender expected India to grow at 7% in the current fiscal year ending March 31, 2025 and 6.5% in the next fiscal year (FY2025-26). World output was expected to grow at 3.2% in 2024 as well as 2025.

The drop in India’s growth from 8.2% in 2023 is “because pent-up demand accumulated during the pandemic has been exhausted, as the economy reconnects with its potential,” the report said.

The U.S. is projected to grow at 2.8% this year and 2.2% next year, an upward revision from the July WEO update.

Globally, inflation has been on the way down.

“The global battle against inflation has largely been won, even though price pressures persist in some countries,” the IMF said. Inflation, which had touched 9.4% in the third quarter of 2022, is expected to be 3.5% by the end of 2025.

A global recession has been avoided through the disinflationary process, despite a synchronised tightening of monetary conditions, the IMF said. However, downside risks now dominate the outlook. The risks had grown since the previous WEO releases in April and June this year.