The International Monetary Fund raised India’s growth forecast for FY25 to 7 percent from 6.8 percent projected in April, according to its World Economic Outlook released on July 16.
“The forecast for growth in India has also been revised upward, to 7 percent, this year, with the change reflecting carryover from upward revisions to growth in 2023 and improved prospects for private consumption, particularly in rural areas,” the fund noted.
The global financial institution expects the economy to grow 6.5 percent in FY26—unchanged from April.
In June, the Reserve Bank of India had revised India’s growth forecast upward to 7.2 from 7 percent earlier.
The country has grown over 7 percent over the last three years.
The economy grew 8.2 percent in FY24, with investment and manufacturing supporting growth.
But private consumption spending was lower at 4 percent. Economists indicate a pick up in rural consumption in FY25, but note that a revival would be contingent on good monsoon and lower inflation.
India’s inflation rose back above 5 percent in June after a four month hiatus, as food inflation surged to 9.4 percent from 8.7 percent earlier.
Global growth stable
On the global front, the fund kept its forecast unchanged at 3.2 percent in 2024, predicting a rise to 3.3 percent next year.
The multilateral institution projected growth to slowdown for the US and Japan from April estimates, while it predicted a faster pace of rise for China.
The fund noted that risks to growth were balanced, with rising risks to inflation, which are expected to increase prospects for higher-for-even-longer rates.