NEW DELHI: The International Monetary Fund (IMF) on Tuesday moderated its projection of India’s growth in FY24 to 5.9 per cent, a 20 basis-point drop from its January forecast of 6.1 per cent. This is substantially lower than the Reserve Bank of India’s latest projection of 6.5 per cent growth in the current financial year.
The growth outlook for FY25 has also been cut to 6.3 per cent, down 50 basis points from the earlier estimate of 6.8 per cent. Despite the downward revisions, India continues to be the fastest-growing economy in the world, the World Economic Outlook figures revealed.
As for the world economy, IMF trimmed growth prospects citing risks from rising interest rates and uncertainties resulting from the collapse of two US regional banks and the forced merger of Credit Suisse.
The IMF now sees global growth to be 2.8 per cent this year, down from 3.4 per cent in 2022 and from the 2.9 per cent estimate for 2023 it made in its previous forecast in January. “With the recent increase in financial market volatility, the fog around the world economic outlook has thickened,” the IMF said.
The 190-country lending organisation, however, expects global inflation to decrease going forward, although more slowly than initially anticipated, from 8.7 per cent in 2022 to 7 per cent this year and 4.9 per cent in 2024.
“Tentative signs in early 2023 that the world economy could achieve a soft landing have receded amid stubbornly high inflation and recent financial sector turmoil,” it said.
Earlier this month, the World Bank had cut India’s growth estimate for FY24 to 6.3 per cent from the 6.6 per cent forecast earlier, while the Asian Development Bank slashed its projection for India to 6.4 per cent from 7.2 per cent.