IMF (International Monetary Fund) Retains India’s Growth Forecasts at 7% for FY25 and FY26

The International Monetary Fund (IMF) has maintained its growth forecasts for India, predicting a growth rate of 7% for FY25 and 6.5% for FY26. 

According to the IMF’s latest World Economic Outlook report, the pent-up demand from the pandemic has been largely used up as the economy returns to its usual growth pace. India’s growth is expected to slow down from 8.2% in FY24 to 7% in FY25 and further to 6.5% in FY26 for this reason.

Earlier in October, the RBI (Reserve Bank of India) also kept its growth forecast for the current financial year at 7.2%, citing strong consumption and investment activity.

Globally, the IMF’s outlook remains almost unchanged from previous projections made in July. Global growth is expected to stay steady at 3.2% for both 2024 and 2025, though the forecast for 2025 was slightly lowered by 0.1% to 3.2%. The report highlights shifts in various sectors and regions, with goods prices remaining higher than services prices due to the pandemic’s impact. The global shift from goods to services consumption is also affecting manufacturing, which is moving towards emerging markets like India and China.

The IMF revised China’s 2024 growth forecast down by 0.2% to 4.8% while raising the U.S. forecast by 0.2% to 2.8%. China’s slowdown in the property sector could affect consumer confidence and have a global impact due to its large role in trade.

Inflation is expected to ease globally, dropping from an average of 6.7% in 2023 to 5.8% in 2024 and 4.3% in 2025. However, service inflation remains high in some regions. For India, the IMF expects inflation to be at 4.4% in FY25 and 4.1% in FY26. It also warns that any new spikes in commodity prices due to geopolitical tensions could slow the disinflation process and complicate monetary policy adjustments.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.