Indian economy likely log faster growth at 6.7% in FY25: OECD

26 Sep 2024 Evaluate

The Organisation for Economic Co-operation and Development (OECD) in its latest Interim Economic Outlook has said that Indian economy is likely log faster growth at 6.7 percent in fiscal year 2024-25 (FY25) compared with 6.6 percent projected earlier in May. It also noted that growth is expected to increase in FY26 to 6.8 percent, up 20 bps from its May forecast. It said solid domestic demand growth is projected to continue in India.

It said the global economy remained resilient in the first half of 2024, with output growing at an estimated annualised rate of 3.2%. It added domestic demand has buoyed activity in Brazil, India and Indonesia, but has slowed in Mexico with the services sector losing momentum. As per the report, the recovery in global trade continued in the first half of 2024, with growth in trade volumes in both goods and services strengthening, especially in the second quarter. An upturn in US import growth, in part due to stronger equipment investment, and greater trade dynamism in key emerging market economies, including China, the Dynamic Asian Economies, Brazil and India, were key factors behind the stronger-than expected resilience of trade.

It further said inflation in the emerging-market economies is projected to remain generally higher than in the advanced economies, while also easing gradually. On the inflation front, the OECD anticipated that prices to rise faster, at 4.5 percent, compared with its May projection of a 4.3 percent increase. However, it noted that prices will ease to 4.1 percent in FY26 from 4.2 projected earlier, which will be near to the RBI’s mid-point target of 4 percent.