The International Monetary Fund (IMF) has revised India’s growth forecast for the fiscal year 2024-25 to 7 percent, an increase from the previous 6.8 percent projection made in April. This adjustment aligns with the Reserve Bank of India’s recent upgrade of its growth outlook to 7.2 percent in June. However, the IMF expressed concerns about global inflation, noting that it is cooling slower than expected in major economies, which could prolong high interest rates and pose risks to global growth.
The IMF highlighted specific issues such as persistent services inflation driven by rising wages and ongoing trade tensions and geopolitical uncertainties. These factors complicate monetary policy normalization and could lead to prolonged higher interest rates. Despite these challenges, the IMF maintained a cautiously optimistic global outlook, keeping this year’s growth forecast at 3.2 percent and slightly increasing next year’s projection to 3.3 percent. Chief Economist Pierre-Olivier Gourinchas emphasized significant developments affecting the global economic landscape.
Regarding the United States, the IMF expressed concern over its fiscal stance, especially given its full employment status, and warned about the increasing debt-to-GDP ratio. For China, the IMF upgraded its growth forecast for this year to 5 percent due to strong private consumption and export performance. However, it cautioned about vulnerabilities in China’s property sector and projected a slowdown to 3.3 percent growth by 2029.
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