Economic Outlook
IMF cuts India FY25 forecast, sees GDP growth remaining at 6.5% in near term
This story was originally published at 19:34 IST on 17 January 2025
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--IMF cuts India FY25 GDP growth forecast by 50 bps to 6.5%
--CONTEXT: IMF releases update to World Economic Outlook report
--IMF retains India FY26, FY27 GDP growth forecasts at 6.5%
--IMF: Growth in India slowed more than expected Jul-Sept
NEW DELHI – The International Monetary Fund has slashed its GDP growth forecast for India for the current financial year ending March after growth slowed more than expected in Jul-Sept, led by a sharper-than-expected deceleration in industrial activity.
The IMF in its latest World Economic Outlook report now projects India's GDP to grow at a four-year low pace of 6.5% in 2024-25 (Apr-Mar), against the previous forecast of 7.0%. The multilateral agency's growth forecast for the current fiscal is 10 basis points lower than the Indian government's first advance estimate of 6.4%. The Indian economy had grown 8.2% in FY24, but growth slipped to a seven quarter low of 5.4% in the Jul-Sept.
Even as the IMF sharply lowered its forecast for India's growth in FY25, it retained its projection of 6.5% growth in both FY26 and FY27. This, the IMF said, is in line with the country's potential growth.
The IMF follows the World Bank in lowering its forecast for India's GDP growth this year. The World Bank on Thursday lowered its earlier forecast for India's GDP growth by 50 bps to 6.5% for FY25 but projected that the Indian economy will expand 6.7% in both FY26 and FY27.
India's growth is seen at 6.8% for the calendar year 2025, and 6.5% in 2026, the IMF said.
The multilateral agency lowered its inflation forecast for emerging market and developing economies by 30 bps and 20 bps for 2025 and 2026, respectively. It sees inflation averaging 5.6% and 4.5% during 2025 and 2026, respectively, in emerging market and developing economies. End
Reported by Shubham Rana
Edited by Tanima Banerjee
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