The International Monetary Fund (IMF) has kept India’s GDP growth forecast for FY25 unchanged at 7%, noting that growth will moderate from 8.2% in 2023 to 7% in 2024 and 6.5% in 2025. According to the IMF’s World Economic Outlook, this moderation is due to the exhaustion of pent-up demand accumulated during the COVID-19 pandemic, as the Indian economy reconnects with its full potential.
Regarding the global economy, the IMF stated that inflationary pressures are easing, with headline inflation rates expected to fall from 9.4% in Q3 2022 to 3.5% by the end of 2025, below the pre-pandemic average of 3.6%. Global economic growth is projected to remain steady at 3.2% for both 2024 and 2025, although some low-income developing countries face significant growth downgrades due to intensified conflicts.
Pierre-Olivier Gourinchas, IMF Chief Economist, highlighted the resilience of the global economy amid the disinflationary process. He also pointed out that while growth in the U.S. is strong at 2.8% in 2023, it is expected to slow to its potential by 2025. Advanced European economies are predicted to experience a modest growth rebound, while emerging markets, especially in Asia, are projected to maintain stable growth around 4.2% through 2024 and 2025.
However, the IMF warned that rising geopolitical tensions, particularly in the Middle East, could threaten commodity markets, and overly tight monetary policies could pose additional risks to global financial conditions.
