IMF raises India growth forecast to 6.1% for FY24 after strong Q4 showing

The International Monetary Fund (IMF) has raised India’s growth forecast and has projected a gross domestic product (GDP) growth of 6.1% this fiscal.

“Growth in India is projected at 6.1% in 2023 (fiscal year 2023-24), a 0.2 percentage point upward revision compared with the April projection, reflecting momentum from stronger-than-expected growth in the fourth quarter of 2022 as a result of stronger domestic investment,” said the IMF in the World Economic Outlook Update, which was released on Tuesday. Its GDP growth projection for the FY25 remains unchanged at 6.3%.

In the World Economic Outlook that was released in April, the IMF had slashed India’s GDP projection to 5.9% in the current fiscal.

The upward revision comes after the economy grew at a faster-than-anticipated pace of 7.2% in the FY23. The IMF’s revised projection for FY24 remains more subdued than the forecasts of other agencies. The Reserve Bank of India has projected GDP growth of 6.5% in the current fiscal while the Asian Development Bank has retained a forecast of 6.4% for the fiscal.

India also retains the tag of the fastest-growing economy with neighbouring China estimated to grow at 5.2% in 2023 and 4.5% in 2024.

The IMF in the Update to the World Economic Outlook has also revised upwards the projection for global growth output to 3% in 2023 from its previous forecast of 2.8%. Advanced economies continue to drive the decline in growth from 2022 to 2023, with weaker manufacturing, as well as idiosyncratic factors, offsetting stronger services activity.

“Global growth is projected to fall from 3.5% in 2022 to 3% in both 2023 and 2024 on an annual average basis. Compared with projections in the April 2023 WEO, growth has been upgraded by 0.2 percentage point for 2023, with no change for 2024,” it said.

On a year-over-year basis, global growth bottomed out in the fourth quarter of 2022, it further said, adding that in some major economies, it is not expected to bottom out before the second half of 2023. “The rise in central bank policy rates to fight inflation continues to weigh on economic activity,” it said.

Global headline inflation is expected to fall to 6.8% in 2023 and further to 5.2% in 2024 from 8.7% in 2022.

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