In its latest ‘World Economic Outlook’ report, the International Monetary Fund (IMF) has raised Bharat’s GDP growth projection for the fiscal year 2024 by 40 basis points to 6.7%, making Bharat the fastest-growing major economy globally. The forecast for the following fiscal year, FY25, has also been increased by 20 basis points to 6.5%, attributed to “resilient domestic demand.”
Despite being an optimistic outlook, the IMF’s projection for FY24 is still 60 basis points lower than the National Statistical Office’s (NSO) estimate and 30 basis points lower than the Reserve Bank of India’s (RBI) estimate. The NSO had recently projected Bharat’s economy to grow at 7.3% for the current fiscal year, based on data extrapolated for the initial months.
The finance ministry noted that the IMF revised Bharat’s growth forecast for FY24 upward to 6.7% from 6.3%, primarily due to the robust Q2 GDP growth of 7.6%, surpassing market expectations. The ministry mentioned that the IMF has also raised the medium-term GDP growth estimate to 6.5% from 6.3%, considering strong public investment and positive labor market outcomes.
However, for FY25, the IMF’s estimate is about 50 basis points lower than the finance ministry’s projection of 7.0%. Chief Economic Adviser V Anantha Nageswaran predicts Bharat’s real GDP growth to be around 7% for the fourth consecutive year in FY25. He anticipates Bharat’s economy to reach the $5 trillion mark by 2027-28, becoming the third-largest economy globally, driven by the financial sector and ongoing structural reforms.
While expressing confidence in Bharat’s growth prospects, the finance ministry report highlighted geopolitical conflicts as a potential area of concern.
On the global front, the IMF expects the world economy to grow at 3.1% in 2023, slightly higher than its previous forecast, citing declining inflationary pressures. Despite the positive outlook, the IMF warns of potential turbulence ahead, emphasizing a slow pace of expansion.
Pierre-Olivier Gourinchas, Chief Economist at the IMF, stated that the global economy is on a path toward a soft landing, with declining inflation and steady growth. The IMF projects the U.S. economy to grow at 2.1% in 2024, 60 basis points higher than its previous forecast, while China’s economy is expected to grow at 4.6%, 40 basis points above the earlier projection. Gourinchas mentioned that several economies, including Brazil, Bharat, and Southeast Asia’s major economies, continue to exhibit resilience with accelerating growth.
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