According to the International Monetary Fund’s (IMF) most recent predictions, India’s economy is expected to develop rapidly, mostly due to public investment. The IMF has revised up its expectation for India’s current fiscal year expansion to 6.8% from prior estimates.
Upward Revision in Growth Forecast
The IMF has revised its growth forecast for India upwards, showing a more optimistic outlook. In January, IMF projected the economy would grow at 6.5%, but now growth estimate for the current fiscal year now stands at 6.8%.
FY24 Growth Projections Surpass Expectations
The IMF sees India growth at 7.8% in FY24. This is more than the government estimates of 7.6% The IMF attributes this positive growth trend to domestic demand, with India emerging as a source of repeated positive growth surprises.
Inflation Outlook and Forecasts
Inflation is a big issue for new countries like India. But the IMF thinks that inflation will be at or near its target for many countries. In India, core inflation is expected to stay contained, but headline inflation may fluctuate. Lower energy prices are likely to lower headline inflation, but persistent food price pressures, especially for essentials like rice, may moderate this trend.
Maintained Inflation Forecasts for FY25 and FY26
The IMF keeps its inflation projections for India at 4.6% and 4.2% for the fiscal years 2025 and 2026, respectively. This forecast is consistent with the Reserve Bank of India’s expectation that inflation will gradually decline to 4.5% throughout the current fiscal year.
Asia-Pacific Economic Outlook
Good news also comes from the IMF’s updated assessment for the Asia-Pacific area. The region’s economic trajectory is expected to improve, with a forecast growth rate of 4.5%, which is an increase from the previous projection of 4.2%. The IMF credits this improvement to a reduction in inflationary pressures and emphasises a near-term risk picture that is more balanced.