IMF Projects India’s FY25 Growth at 7%, Highlights Resilience Amid Global Headwinds
The International Monetary Fund (IMF), in its October 2024 World Economic Outlook, maintained India’s growth forecast at 7% for FY25 and 6.5% for FY26, signaling sustained momentum in the face of global uncertainties. For FY24, India’s economy grew by 8.2%, driven by pent-up demand, which is expected to moderate moving forward.
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India Leads Emerging Markets with Strong Domestic Demand
India’s domestic consumption and investment remain key drivers of growth, with the RBI projecting 7.2% growth for FY25. Similarly, the World Bank recently raised India’s FY24 forecast to 6.6%, citing strong economic momentum. NR Bhanumurthy from the Madras School of Economics remarked that India has the potential to grow at 9% annually, though risks like rising oil prices and global inflation could limit growth.
Global Growth Steady But Uneven
While the IMF kept its global growth forecast at 3.2% for 2024 and 2025, it noted mixed regional trends. Advanced economies, including the U.S., are projected to grow at 2.8% in 2024 and 2.2% in 2025, while China’s growth is expected to slow to 4.8% in 2024. In contrast, emerging markets, led by India and Russia, are forecast to grow at 4.2%, driven by robust demand for electronics and AI investments.
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Key Risks: Oil Prices, Inflation, and Geopolitical Tensions
Despite the optimistic outlook, global inflation, volatile oil prices, and geopolitical tensions pose challenges. IMF’s Chief Economist, Pierre-Olivier Gourinchas, warned that conflicts in the Middle East and tighter financial conditions could disrupt growth across commodity markets, affecting economies like India.
Outlook: Positioned for Long-Term Growth
India’s growth outlook remains robust due to strong domestic demand and opportunities from global AI investments. However, successfully navigating external risks will be crucial to maintaining its position as one of the world’s fastest-growing major economies.With stable economic fundamentals, India is well-positioned to thrive, but vigilance against external shocks will be key to sustaining this momentum in the coming years.
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