IMF Upgrades India's FY25 Growth Forecast to 6.8%, Cites Strong Domestic Demand

The International Monetary Fund (IMF) has significantly upgraded India's economic growth forecast. The nation's strong domestic demand and rising working-age population are cited as primary reasons for the positive outlook.

The IMF now projects India's GDP to grow by 6.8% in the current fiscal year, a 30 basis point increase from its previous forecast in January. Additionally, India's GDP is projected to grow by 6.5% in the following fiscal year (2025-26).

Outpacing Other Economies​

India's strong growth stands in contrast to both the IMF's revised forecast for global growth and the outlook for other major emerging markets. Globally, growth is estimated at 3.2% in 2023 and is projected to remain at the same pace in 2024 and 2025. The IMF notes that lingering effects of the COVID-19 pandemic, Russia's invasion of Ukraine, and factors like high borrowing costs are hindering global expansion.

The five largest emerging market economies—Brazil, China, India, Indonesia, and Russia—contributed approximately 0.8 percentage point of the 1.8 percentage point drop in projected global growth.

IMF Insights​

"Growth in India is forecast to remain strong, with the robustness reflecting continuing strength in domestic demand and a rising working-age population," the IMF stated in its World Economic Outlook report.

Additional IMF Forecasts​

• China: GDP growth forecast has been retained at 4.6% for 2024, and 4.1% for 2025.
• United States: The IMF has also raised the US GDP growth forecast by 60 basis points to 2.7% for 2024 and 1.9% for 2025.