IMF raises India's growth projection to 6.8% for 2024

Citing bullish domestic demand conditions and a rising working-age population, the International Monetary Fund (IMF) in its latest edition of the World Economic Outlook has raised India's growth projection to 6.8 per cent for 2024. IMF in its January update had projected 6.5 per cent growth for India in 2024. With this, India continues to be the fastest growing economy of the world, ahead of China's growth projection of 4.6 per cent during the same period. It said ‘Growth in India is projected to remain strong at 6.8 per cent in 2024 and 6.5 per cent in 2025, with the robustness reflecting continuing strength in domestic demand and a rising working-age population’. At the same time, growth in emerging and developing Asia is expected to fall from an estimated 5.6 per cent in 2023 to 5.2 per cent in 2024 and 4.9 per cent in 2025, a slight upward revision compared with the January 2024 WEO Update.

As per the IMF outlook, ‘Growth in China is projected to slow from 5.2 per cent in 2023 to 4.6 per cent in 2024 and 4.1 per cent in 2025, as the positive effects of one-off factors - including the post pandemic boost to consumption and fiscal stimulus - ease and weakness in the property sector persists’. Global growth, estimated at 3.2 per cent in 2023, is projected to continue at the same pace in 2024 and 2025. Pierre-Olivier Gourinchas, chief economist of the IMF said ‘Despite gloomy predictions, the global economy remains remarkably resilient, with steady growth and inflation slowing almost as quickly as it rose. The journey has been eventful, starting with supply-chain disruptions in the aftermath of the pandemic, an energy and food crisis triggered by Russia's war on Ukraine, a considerable surge in inflation, followed by a globally synchronized monetary policy tightening’.

He said global growth bottomed out at the end of 2022, at 2.3 per cent, shortly after median headline inflation peaked at 9.4 per cent. He observed growth this year and next will hold steady at 3.2 per cent, with median headline inflation declining from 2.8 per cent at the end of 2024 to 2.4 per cent at the end of 2025. Most indicators continue to point to a soft landing. China's economy remains affected by the downturn in its property sector. Credit booms and busts never resolve themselves quickly, and this one is no exception.