India Expected to Maintain Position as Fastest Growing Major Economy, According to IMF’s World Economic Outlook
The International Monetary Fund (IMF) has revised its growth projections for India, forecasting a 6.7% growth for the current fiscal year ending in March, and 6.5% for the next financial year. While these figures are lower than the Indian government’s projections, India is anticipated to continue as the fastest growing major economy, as per the latest World Economic Outlook.
IMF’s Perspective
Pierre-Olivier Gourinchas, the chief economist of the IMF, highlighted that India is among the emerging market economies showing strong performance. The upward revision in growth projections is attributed to robust growth driven by increased spending. The difference between the IMF’s and the government’s estimates is primarily due to a slowdown in growth during the second half of the fiscal year. The IMF’s World Economic Outlook emphasized that the growth reflects the resilience in domestic demand.
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Discrepancy in Projections
The official advance estimates for the current fiscal year put India’s GDP growth at 7.3%, while the finance ministry anticipates over 7% expansion in the next year. This contrasts with the IMF’s initial estimate of 6% GDP growth for the current fiscal year, which was later revised to 6.3% in October before the recent update.
Global Economic Forecast
In addition to India’s revised growth projections, the IMF has also improved its forecast for the global economy. The growth is now projected at 3.1% in 2024, which is 0.2 percentage points higher than the October estimate. This improvement is attributed to the increased resilience in the US and several developing countries, along with fiscal support in China. The IMF’s chief economist cautioned central banks against premature easing, despite signs of moderating inflation in several countries.
In conclusion, the IMF’s upward revision of India’s growth forecast, despite variations with the government’s projections, reflects the country’s strong performance in the emerging market economies. The global economic forecast has also improved, indicating a gradual descent towards a soft landing, with declining inflation and sustained growth. However, the IMF has advised caution to central banks against premature easing, as the pace of expansion remains slow and potential turbulence may lie ahead.
