IMF Forecasts India's Economic Growth at 6.5% for 2025 and 2026
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Synopsis
The IMF projects India's economy will grow at a solid 6.5% in 2025 and 2026. This aligns with previous forecasts and indicates the resilience of India's economic potential amid global trends.
Key Takeaways
- India's growth is projected at 6.5% for 2025 and 2026.
- World Bank estimates 6.7% growth for the next fiscal year.
- Global economy shows varied stability across nations.
- Inflation is gradually decreasing.
- RBI's rate decisions are closely watched.
New Delhi, Jan 18 (NationPress) The economic growth in India is anticipated to remain robust at 6.5 percent for both 2025 and 2026, as highlighted in the recent World Economic Outlook (WEO) update by the International Monetary Fund (IMF). This prediction aligns with earlier October estimates and reflects India's economic potential.
This forecast follows the World Bank’s projection of a 6.7 percent growth rate for India in the upcoming fiscal year commencing in April, slightly above the current fiscal year, maintaining India’s position at the top of global growth rankings.
The IMF notes that the global economy is stabilizing, though the degree of this stability varies significantly from one country to another.
In the third quarter of 2024, global GDP growth fell short of the October 2024 WEO predictions by 0.1 percentage point, influenced by underwhelming data from certain Asian and European nations.
“Global growth is expected to remain steady at 3.3 percent this year and next, reflecting a decline in potential growth post-pandemic. Inflation is gradually decreasing — projected at 4.2 percent this year and 3.5 percent next — moving closer to central bank targets,” stated IMF Chief Economist and Director of Research, Pierre-Olivier Gourinchas.
The US economy is outperforming expectations due to stronger domestic demand, while Europe is grappling with sluggish growth and persistently elevated energy costs.
“Emerging markets exhibit resilience, with China poised for a modest recovery,” Gourinchas commented.
Growth performance in emerging markets and developing economies for 2025 and 2026 is expected to be largely consistent with 2024.
According to the IMF, disruptions from policies could hinder the ongoing disinflation process, affecting fiscal sustainability and financial stability.
“Monetary policy must remain flexible to tackle inflation risks while safeguarding expectations from wavering. Fiscal strategies need to be stabilized,” Gourinchas emphasized.
This necessitates the implementation of credible consolidation measures where required. Concurrently, structural reforms are crucial to safeguarding growth during this transition and should focus on promoting innovation and competition.
All attention is now directed toward the RBI as it considers potential rate cuts next month amidst declining inflation.
The IMF report indicates that in areas where inflation remains stubborn, central banks are proceeding cautiously in the easing cycle, closely monitoring economic activity, labor market data, and exchange rate fluctuations.
“A few central banks are increasing rates, signaling a divergence in monetary policy,” it noted.
The World Bank’s Global Economic Prospects, released this Thursday, projected India’s growth rate for the current fiscal year at 6.5 percent.
It stated that “the services sector is expected to experience continued growth, while manufacturing activities will strengthen, bolstered by government initiatives aimed at enhancing the business environment,” supporting growth predictions of 6.7 percent for the next two fiscal years.
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