IMF Projects 6.5% Growth for India, Outpacing China's Projections

The International Monetary Fund (IMF) has dubbed India as “one of the strong performers”, foreseeing a robust growth rate of 6.5% for the year 2024 in its latest report on Tuesday. 

With this, India continues to be the fastest growing economies of the world and ahead of China’s growth projection of 4.6 per cent during the same period, it said. 

“Indeed, India is one of the strong performers. We had a fairly sharp revision in the Fiscal Year 2023 to 2024, the one that is ending, and that has just ended. Then we have 0.3 percentage point upgrade for Fiscal Year 2024 to 2025. So, India is doing quite well,” Pierre-Olivier Gourinchas, chief economist of the IMF, told reporters at a news conference here. 

Growth in India is projected to remain strong at 6.8 per cent in 2024 and 6.5 per cent in 2025, with the robustness reflecting continuing strength in domestic demand and a rising working-age population, according to the latest edition of the World Economic Outlook released by the IMF ahead of the annual spring meetings of the IMF and the World Bank. 

At the same time, growth in emerging and developing Asia is expected to fall from an estimated 5.6 per cent in 2023 to 5.2 per cent in 2024 and 4.9 per cent in 2025, a slight upward revision compared with the January 2024 WEO Update. 

“Growth in China is projected to slow from 5.2 per cent in 2023 to 4.6 per cent in 2024 and 4.1 per cent in 2025 as the positive effects of one-off factors – including the post pandemic boost to consumption and fiscal stimulus – ease and weakness in the property sector persists,” the IMF said. 

Global growth, estimated at 3.2 per cent in 2023, is projected to continue at the same pace in 2024 and 2025. The forecast for 2024 is revised up by 0.1 percentage point from the January 2024 WEO Update, and by 0.3 percentage point from the October 2023 WEO, the IMF said. 

Responding to a question, Daniel Leigh, Division Chief, IMF Research Department moderation partly reflects the tightening in monetary policy and the tightening in fiscal policy, which is necessary to bring inflation down. 

“We see inflation coming down — is in the target range 4.6 this year, 4.2 next year. There are upside risks to this forecast. They could be further strengthened in private demand. Also, an upside comes from the potential for reforms that would liberalise foreign investment and really boost exports and boost jobs and labour force participation. So, it’s a very strong outlook, and there’s a balanced risk outlook,” Leigh said.